HomeMy WebLinkAbout1998-12-08; City Council; 14965; Poinsettia Gardens Affordable Apartment Projectia i!!i
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CITY OF CARLSBAD - AGENDA BILL
TITLE- APPROVAL OF CITY FINANCIAL ASSISTANCE FOR DEPT. HD.
THEPOINSETTIA GARDENS APARTMENTS AFFORDABLE
HOUSING PROJECT, AND APPROVAL OF THE CITY’S CITY Al-l-Y. e
INTENTION TO ISSUE MULTI-FAMILY HOUSING REVENUE
BONDS FOR THE CONSTRUCTION OF THE SUBJECT CITYMGR.
PROJECT TO BE LOCATED WITHIN THE POlNSElTlA
PROPERTIES SPECIFIC PLAN. 51)? q&o9
RECOMMENDED ACTION:
That the City Council take the following three actions: 1) ADOPT Resolution No
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APPROVING
financial assistance for the Poinsettia Gardens Apartments, which includes exemx of the Public
Facility Fee and a construction loan in the amount of $920,000 from the City’s Housing Trust Fund,
and approving the related loan documents; 2) ADOPT Resolution No.98 -3 59 APPROVING the
City’s intention to issue tax-exempt multi-family revenue bonds in an amount not to exceed $6.5
million for the purposes of financing construction of the Poinsettia Gardens Apartments, and
approving the maximum amount of bond proceeds to be used for reimbursement of expenses
related to the project and bond issuance which may be incurred prior to the date of initial execution
and delivery of the bond proceeds; and, 3) set January 12, 1999 as the public hearing date to accept
comments from the public on the City’s intent to issue bonds for the subject project.
ITEM EXPLANATION:
AFFORDABLE HOUSING PROJECT DESCRIPTION
The proposed affordable housing project is located generally on the easterly side of Avenida Encinas,
north of Poinsettia Lane. The project will be developed by Poinsettia Housing Associates, of which
Bridge Housing Corporation is the general partner (Developer). The proposed project will satisfy the
affordable housing requirement for the Poinsettia Properties Specific Plan which currently intends to
provide for a total of 617 total housing units.
The affordable housing project proposes a total of 92 apartment units. These units will include 36 one
bedroom (39%), 44 two bedroom (48%) and 12 three bedroom units (13%). All 92 units will rent for a
maximum of 60% of the area median income. The project will also provide an approximately 2,500
square foot recreation building; laundry facilities; a “tot-lot” with playground equipment; a swimming
pool; a private pedestrian trail system; and, 267 on-site parking spaces. The Site Development Plan
(SDP) for the project still requires approval by the Planning Commission and City Council. It is
anticipated that the project SDP will be submitted to the Planning Commission in January, 1999 for
review. The Housing Commission reviewed the subject SDP for the project in August, 1998 and
recommended approval by the Planning Commission and City Council.
FINANCIAL ASSISTANCE FOR THE AFFORDABLE HOUSING PROJECT
As typically required, the Developer will use a variety of sources to finance the affordable housing
project noted above. These sources of funds are summarized later within this report. As part of the
project financing, the Developer is requesting that the City provide the following direct financial
assistance to the project:
1. A construction loan in the amount of $920,000, or $10,000 per unit, from the Housing Trust Fund.
2. Exemption of the Public Facility Fee (PFF) for the project as permitted by City Council Policy No.
17.
3. Waiver of Park In-Lieu Fees based on existing surplus park dedication.
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In addition to the direct financial assistance noted above, the Developer is requesting that the City
issue tax-exempt multi-family revenue bonds in an amount not to exceed $6.5 million to assist in
financing the subject project.
The financial details of the subject project are provided below. The recommendations of the Housing
Commission and Staff on the noted financial assistance requests are also provided below.
USES AND SOURCES OF FUNDS
As currently proposed, the total cost of the Poinsettia Gardens Apartment project is estimated to be
$11.7 million. The following chart provides a breakdown of the project costs, or uses of funds. Based
on detailed review of the costs, staff has found that the costs are reasonable and the total per unit
cost of $127,000 is generally consistent with other affordable multi-family developments within the
City. In the past, the “Developer Fee” has been a specific point for discussion. As shown in the
attached chart, the proposed developer fee is approximately $819,000 which represents 7% of total
project costs; this fee is the maximum the developer may receive under the proposed Financial
Assistance Agreement with the City. This developer fee is consistent with other affordable housing
projects recently approved by the City Council and is considered reasonable by industry standards.
I Acquisition & Related Costs $2,900,000 $31,522
Consultants $544,053 $5,913
Permits & Fees $1,211,978 $13,174
Construction - Hard Costs $4,912,294 $53,395
Develooment Exbenses $716.152 $7.784
Developer Fee
Financina I $819,000 1 $8,902
$596.686 1 $6.486
The following chart provides a breakdown of the sources of funds for the proposed development. The
two primary sources of funding for the proposed project are 1) proceeds from tax exempt multi-family
revenue bonds; and, 2) proceeds from the sale of tax credits to a limited partnership. The developer
is requesting that the City issue the bonds on behalf of the project. This bond issuance is explained in
further detail later within this report. As indicated in the project proforma, the Master Developer for
Poinsettia Properties will contribute the land (valued at $2.9 million) and cash in the amount of
$900,000 to the project. The Developer is requesting that the City contribute a total of $920,000 to the
project. The City’s contribution, if approved by the Council, will be provided to the project in the form
of a construction loan to be repaid through future surplus cash generated from project operations.
Bonds/Long Term Debt
Ma ~~ ster Develober Contribution
Contribution Land (Master Developer)
II Citv Loan I 3
Total Amount
$4,125,000
$900,000
$2,900,000
i920.000
Per Unit
$44,836
$9,782
$31,521
$10,000
$275
IO I $1.086
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FINANCIAL ASSISTANCE DOCUMENTS
As proposed, the City assistance ($920,000) will be provided in the form of a residual receipts loan
secured by a note and deed of trust. The outstanding principal and accrued interest on the City loan
will be amortized over thirty years and repaid from cash surplus in equal annual installments of
principal and interest. In the event that there is not adequate cash surplus to repay the City loan, the
outstanding balance shall accrue with simple interest at 3% per annum. The terms of the City
assistance is similar to the loans provided for the Villa Loma, Laurel Tree and Ranch0 Carrillo
Affordable Housing projects.
In order for the project to receive the $920,000 loan, the Developer is required to enter into loan and
regulatory agreements with the City of Carlsbad. These agreements and related documents are
attached for review. As one of the actions set forth within this report, the City Council is being asked
to approve, in substantially the form presented, the Loan Agreement, Deed of Trust, Promissory
Note and Regulatory Agreement which are all attached as Exhibit 4 for review. These documents are
explained below:
7. Loan Agreement states the terms and conditions relating to the City’s loan.
2. Regulatory Agreement records the terms of affordability and the operation requirements for the
project.
3. Promissory Note is executed by the Developer and expresses their intent to repay the loan.
4. Deed of Trust is recorded against the property to secure the City’s interest in the subject property
and related improvements.
It is important to also note that the City will ultimately be required to subordinate the subject
documents to the senior lien holder. If approved, the attached resolution authorizes the City
Manager, or his designee, to execute subsequent subordination agreements. While the subordination
documents will not return to the City Council for review, Staff will take the necessary steps to insure
that the documents provide the City with adequate notice and cure ability. The subordination
documents will be reviewed by, and be subject to final approval by, the City Attorney and Special
Legal Counsel.
The Developer has also requested exemption from the Public Facilities Fee for the subject project.
With approval of the attached resolution, the project will be exempted from the subject fee. There will
be no additional documents required to allow for this fee exemption.
HOUSING COMMISSION RECOMMENDATION ON FINANCIAL ASSISTANCE
At their meeting on September 29, 1998, the Housing Commission reviewed the request from
Poinsettia Housing Associates (Bridge) for financial assistance related to the subject affordable
housing project. The Commission also reviewed the draft financial assistance
agreements/documents. The Commission recommended (6-O) that the City Council approve the
exemption of the Public Facility Fee, which amounts to approximately $200,000, and the construction
loan in the amount of $920,000 from the Housing Trust Fund. They also recommended approval of
the related loan and regulatory documents.
As noted above, the Developer also requested that the City waive the Park In-Lieu
Fee for the affordable housing project. In their project proforma, the Developer assumed that the Park
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In-Lieu Fee-will be waived by the City. However, there was no justification or staff analysis provided to
the Housing Commission for this fee waiver. Therefore, the Housing Commission did not take action
on this fee as related to financial assistance for the subject project. Staff is recommending that action
on waiver of the Park In-Lieu Fee be taken at a later date, after staff has submitted its analysis of the
request from the Developer.
BOND ISSUANCE REQUEST
As noted above, in addition to the direct financial assistance, the Developer has requested that the
City issue tax-exempt, Multi-Family Housing Revenue Bonds to assist in financing the project. It is
important to note that only State and local government entities are permitted to borrow money
through the issuance of tax-exempt bonds. For the subject project, the tax exempt bonds could be
issued through the State of California’s Housing Financing Agency (CHFA), the City of Carlsbad, or
the County of San Diego. One of these agencies, or entities, may then act as a conduit whereby
bonds are issued and sold, and the proceeds are loaned to a Developer to be used for a private
development purpose. The legal obligation for the repayment of the bonds rests solely with the
developer of the project. Further, all costs associated with the bond issuance, including any fees and
expenses incurred by the issuing agency, or assessed by the issuing agency, are paid from the
proceeds of the bonds. Rather than requesting the State or the County to issue the bonds, the
Developer has requested that the City of Carlsbad act as bond issuer.
In the above Sources of Funds chart, the Developer estimates that approximately $4.1 million in bond
proceeds will be required to finance the subject project on a long term basis. However, the Council is
being asked to authorize bonds up to $6.5 million as the funds from the tax credit equity will not be
available until after the project is constructed. The bond issue will be structured to pay down the
bonds as the equity funds are received.
To issue tax-exempt bonds, the City must apply for, and receive, an allocation of private activity
bonds from the California Debt Limit .Allocation Committee (CDLAC). While the City will be the
applicant, it will actually be the responsibility of the Developer to complete and submit the application
to CDLAC in the name of, and on behalf of the City, subject to staff review. Typically, CDLAC meets
quarterly to issue bond allocations to the various government entities. Because the Developer
expects the requests for allocations to far exceed the amount available, and to insure the project will
be financed in 1999, the Developer wishes to apply to CDLAC in the “first round”. The deadline to
apply for the first round of bond allocations is December 15, 1998.
Before the City may apply to CDLAC, the Council must adopt an Inducement Resolution allowing for
certain actions to occur. The subject resolution must contain the following provisions: 1) declaration of
the City’s intention to issue tax-exempt bonds; 2) allowance for a portion of the bond proceeds to be
used to reimburse appropriate expenditures related to the subject bond issuance; and, 3) declaration
of the City’s intent to hold a public hearing in compliance with Section 147(f) of the Internal Revenue
Code of 1986, which requires approval of the issuance of the bonds to be approved by the applicable
elected representative (City Council), following a reasonably noticed public hearing. With approval of
the City Council, a public hearing will be scheduled for January 12, 1999 to accept public comments
on the City’s intent to issue bonds to finance the subject project. The subject public hearing is
required to be noticed by December II, 1998. The attached Inducement Resolution sets the public
hearing for January 12th and instructs the City Clerk to publish the required notice by December 11,
1998.
Adoption of the inducement Resolution expresses the City’s intent to issue the bonds. However, it
does not obligate the City to issue the bonds. The inducement Resolution establishes the maximum
amount of bonds to be issued for the purposes of filing an application to the State for approval of a
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bond allocation,for-the,project. The public hearing in January, 1999 will allow the Council to receive
comments on the intent to issue bonds. Then, a future action by the Council will be required to adopt
a “Bond Resolution” to authorize the actual sale and issuance of the bonds. This action on the actual
authorization to issue the bonds would most likely occur in May, 1999.
STAFF RECOMMENDATION
For information purposes, the Housing Commission did not consider the request from the Developer
for the City to issue bonds for the subject project. This request was presented after the Housing
Commission review on September 2gth. Therefore, there is no recommendation from the Housing
Commission on this matter. However, the request has been reviewed by the Housing Policy Staff
Team, and this Team has recommended approval of the action. As noted above, the Housing
Commission did take action, however, to recommend approval of the financial assistance for the
project.
Staff recommends that the City Council adopt the attached resolution to authorize financial assistance
for the Poinsettia Gardens Apartment. At this time, the approved assistance includes an exemption
from the Public Facility Fee ($201,000) and a construction loan from the City’s Housing Trust Fund in
the amount of $920,000. The Developer’s request to waive the Park In-Lieu Fee will be presented at
a later date for action by the City Council, after an analysis report has been completed by Staff.
Adoption of the second resolution will indicate the City’s intent to issue tax-exempt bonds to finance
the project and reimburse appropriate expenditures related to that bond issuance. Approval of the
second resolution will also set the date of January 12, 1999 for a public hearing to receive comments
from the public on the City’s intent to issue bonds. These actions will allow the Developer to submit
the required application to CDLAC by December 15, 1998 for a bond allocation in the amount of $6.5
million.
ENVIRONMENTAL REVIEW
An Environmental Impact Report was approved by the City Council for the entire Master Plan on
January 20, 1998 (EIR 96-01). No further environmental review is required as part of the approval of
the subject financial assistance or the bond issuance.
FISCAL IMPACT:
The financial assistance in the form of a $920,000 residual receipts loan will be provided from the City
of Carlsbad’s Housing Trust Fund which has a current undesignated fund balance of approximately
$4.82 million. The exemption from the Public Facilities Fee for the subject project means that the City
will not receive approximately $200,000. Therefore, the total financial contribution to the project at this
time shall be approximately $1 ,I 20,000.
The Council is also being asked to take action to express the City’s intent to issue tax exempt bonds
in an amount not to exceed $6.5 million to assist in financing the subject project. If the Council does
in fact take action at a later date to issue bonds for the subject project, all costs associated with
issuance of those bonds (City expenses, bond counsel, underwriting, financial advisor, etc.) will be
paid from the proceeds of the bond issue. In addition, the entire legal obligation to repay the bonds
rests with the Developer. Therefore, there will be no fiscal impact to the City resulting from the
issuance of the bonds.
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EXHIBITS:
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City Council Resolution No. 9b -3 98 , t o approve financial assistance for the Poinsettia
Gardens Apartment Affordable Housing Project.
City Council Resolution No. 98-349 , to indicate the City’s intent to issue bonds and to
reimburse appropriate expenditures.
Development Proforma for the Poinsettia Gardens Apartment Project.
Loan Documents for financial assistance from the City of Carlsbad, including a Loan Agreement,
Note, Deed of Trust and Regulatory Agreement.
Housing Commission Staff Report dated, September 29, 1998.
Housing Commission Minutes of September 29, 1998.
Housing Commission Resolution No.98-014, recommending approval of the requested financial
assistance for the Poinsettia Gardens Apartment project.
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CITY COUNCIL RESOLUTION NO. 98-398
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF CARLSBAD, CALIFORNIA, TO APPROVE A
REQUEST TO PROVIDE FINANCIAL ASSISTANCE TO
POINSETTIA HOUSING ASSOCIATES, WHICH
INCLUDES A CONSTRUCTION LOAN OF $920,000
FROM THE HOUSING TRUST FUND AND EXEMPTION
OF THE PUBLIC FACILITY FEE, AND TO APPROVE
THE RELATED LOAN DOCUMENTS FOR
CONSTRUCTION OF NINETY-TWO (92) AFFORDABLE
APARTMENT UNITS WITHIN THE POINSETTIA
PROPERTIES SPECIFIC PLAN.
APPLICANT: POINSETTIAHOUSING
ASSOCIATES
CASE NO: SDP 98-09
WHEREAS, the master developer of the Poinsettia Properties Specific Plan,
HSL/BP/Michan, L.L.C has proposed to construct 92 apartment units affordable to lower income
households as a means to satisfy their affordable housing obligation as permitted by Carlsbad
Municipal Code Section 2 1.85 of the City’s Inclusionary Housing Ordinance; and
WHEREAS, said Housing Commission did, on the 29th day of September, 1998, hold a public
meeting to consider the request for City financial assistance for the construction of said 92 affordable
housing apartment units by the affordable housing developer, Poinsettia Housing Associates and
subsequently recommended approval of the request for assistance ; and
WHEREAS, the City Council did hold a public meeting to consider said request for City
financial assistance for the construction of said 92 affordable housing apartment units by the
affordable housing developer, Poinsettia Housing Associates; and;
WHEREAS, at said public meeting, upon hearing and considering all testimony, if any, of al1
persons desiring to be heard, said Council considered all factors relating to the application and request
for financial assistance:
NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City of
Carlsbad, California, as follows:
1. The above recitations are true and correct.
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2. The request for City financial assistance is consistent with the goals and objectives of
the City of Carlsbad’s Housing Element and Consolidated Plan, the Inclusionary
Housing Ordinance, and the Carlsbad General Plan.
3. The request for City financial assistance will assist the affordable housing developer
to construct a total of 92, one, two and three bedroom affordable apartment units. The
project, therefore, has the ability to effectively serve the City’s housing needs and
priorities as expressed in the Housing Element and the Consolidated Plan.
4. That the City Council of the City of Carlsbad hereby APPROVES financial assistance
to the proposed affordable housing project known as the “Poinsettia Gardens
Apartments” in the following form:
a. Exemption from payment of the Public Facilities Fee for the affordable housing
project based on City Council Policy No. 17.
b. A construction loan in the amount of $920,000 from the City of Carlsbad’s
Housing Trust Fund.
5. That the City Council authorizes the City Manager or his designee to execute all
documents related to provision of the City assistance, including but not limited to a
Loan Agreement, Note, Deed of Trust and Regulatory Agreement, in substantially the
form presented to the City Council, subject to review and approval by the City
Attorney.
6. That the City Council authorizes the City Manager or his designee to execute
subsequent subordination agreement(s), as required, subject to review and approval by
the City Attorney and/or Special Legal Counsel.
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CC Resolution No. 98-398
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7. That Poinsettia Housing Associates shall be required to enter into appropriate agreements for the
provision of the subject financial assistance from the City of Carlsbad. These agreements must be
executed and recorded prior to any release of funds by the City of Carlsbad.
8. This approval for the subject financial assistance shall become null and void if the Site
Development Plan and/or other required entitlements are not ultimately approved by the City of
Carlsbad for the subject affordable housing project.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council
of the City of Carlsbad, California, held on the 8 th day of December, 1998 by the following vote, to
wit:
AYES: Council Members Lewis, Finnila, Nygaard, Kulchin and Hall
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
(SEAL)
CC Resolution No. 98-398
Page 3
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CITY COUNCIL RESOLUTION NO. 98-399
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, TO APPROVE THE CITY’S
INTENTION TO ISSUE TAX-EXEMPT MULTI-FAMILY
REVENUE BONDS FOR THE PURPOSES OF FINANCING THE
CONSTRUCTION OF NINETY-TWO (92) AFFORDABLE
APARTMENT UNITS, KNOWN AS POINSETTIA GARDENS
APARTMENTS, WITHIN THE POINSETTIA PROPERTIES
SPECIFIC PLAN AND TO APPROVE $6300,000 AS THE
MAXIMUM AMOUNT OF PROCEEDS OF THE
OBLIGATIONS TO BE USED FOR REIMBURSEMENT OF
EXPENDITURES FOR THE ACQUISITION, CONSTRUCTION
AND DEVELOPMENT OF THE PROJECT THAT ARE PAID
BEFORE THE DATE OF INITIAL EXECUTION AND
DELIVERY OF THE OBLIGATIONS.
APPLICANT: POINSETTIA HOUSING ASSOCIATES
CASE NO: SDP 98-09
WHEREAS, the City of Carlsbad (the “City”) intends to issue tax-exempt obligations (the
“Obligations”) for the purpose, among other things, of making a loan to Poinsettia Housing Associates,
a California limited partnership, the general partner of which in BRIDGE Housing Corporation of
Southern California, a nonprofit public benefit corporation (“BRIDGE”) or such other limited
partnership or limited liability of which BRIDGE is the general partner or managing member,
respectively, (the “Developer”), the proceeds of which shall be used by the Developer to finance the
acquisition, construction and development of a multifamily housing rental facility to be located at
Northwest comer of Poinsettia Lane and Avenida Encinas in the City of Carlsbad, California and
commonly known as Poinsettia Gardens Apartments, (the “Project”); and
WHEREAS, the City is authorized by Chapter 7 of Part 5 of Division 31 of the Health and
Safety Code of the State of California (the “Law”) to issue and sell revenue bonds for the purpose of
financing the acquisition, construction and development of multifamily rental housing facilities to be
occupied in part by low income tenants; and
WHEREAS, it is in the public interest and for the public benefit that the City declare its
official intent to reimburse the expenditures referenced herein;
NOW, THEREFORE, BE IT HEREBY RESOLVED by the City Council of the City
of Carlsbad, California, as follows:
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The City intends to issue the Obligations for the purpose of paying the costs of financing
the acquisition, construction and development of the Project.
The City hereby declares that it reasonably expects that a portion of the proceeds of the
Obligations will be used for reimbursement of expenditures for the acquisition,
construction and development of the Project that are paid before the date of initial
execution and delivery of the Obligations.
The maximum amount of proceeds of the Obligations to be used for reimbursement of
expenditures for the acquisition, construction and development of the Project that are paid
before the date of initial execution and delivery of the Obligations is $6,500,000.
The foregoing declaration is consistent with the budgetary and financial circumstances of
the City in that there are no ‘funds (other than proceeds of the Obligations) that are
reasonably expected to be (i) reserved, (ii) allocated or (iii) otherwise set aside, on a
long-term basis, by or on behalf of the City, or any public entity controlled by the City, for
the expenditures for the acquisition, construction and development of the Project that are
expected to be reimbursed from the proceeds of the Obligations.
The Developer shall be responsible for the payment of all present and future costs in
connection with the issuance of the Obligations, including, but not limited to, any fees and
expenses incurred by the City in anticipation of the issuance of the Obligations, the City’s
financing fee with respect to the issuance of the Obligations, the City’s annual
administration fee with respect to administering the provisions of a regulatory agreement
with respect to the Project, the cost of printing any official statement, rating agency costs,
bond counsel fees and expenses, underwriting discount and costs, financial advisor’s fees
and expenses, trustee fees and expense, and the costs of printing the Obligations. The
payment of the principal, redemption premium, if any, and purchase price of and interest
on the Obligations shall be solely the responsibility of the Developer. The Obligations
shall not constitute a debt or obligation of the City.
The City shall hold a public hearing on January 12, 1999 to receive comments on the
City’s intent to issue bonds for the subject project.
The City Clerk is hereby directed to publish on or before December 11, 1998 in a paper of
general circulation within the City of Carlsbad a notice of public hearing with respect to
the public hearing to be held by the City Council on January 12, 1999 regarding the
issuance of bonds to finance the subject Project.
The law firm of Jones Hall, A Professional Law Corporation, is hereby named as bond
counsel to the City in connection with the issuance of the Obligations. The fees and
expense of bond counsel are to be paid solely from the proceeds of the Obligations or
directly by the Developer.
Subject to prior City Staff review of the application, the Developer is hereby authorized to
make an application to the California Debt Limit Allocation Committee for an allocation
of private activity bonds for the financing of the Project, in the name of and on behalf of
the City of Carlsbad.
CC Resolution No. 98-399
Page 2
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10. The adoption of this Resolution is solely for the purpose of meeting the requirements of
the Tax Law Reimbursement Provisions and the Code and shall not be construed in any
other manner, the City nor its staff having fully reviewed or considered the financial
feasibility of the Project or the expected operation of the Project with regards to any State
of California statutory requirements, and such adoption shall not obligate without further
formal action to be taken by this City Council, including, but not limited to, the approval
of the financing documents by the City Council by resolution, (i) the City to provide
financing to the Developer for the acquisition, construction and development of the
Project or to issue the Obligations for purposes of such financing; or (ii) the City, or any
department of the City, to approve any application or request for, or take any other action
in connection with, any environmental, General Plan, zoning or any other permit or other
action necessary for the acquisition, construction, development or operation of the Project.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the City Council
of the City of Carlsbad, California, held on the 8 th day of December, 1998 by the following vote, to
wit:
AYES: Council Members Lewis, Finnila, Nygaard, Kulchin and Hall
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
ALETHA L. RAUTENKRANZ, City Clerk 1
(SEAL)
CC Resolution No.
Page 3
98-399
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- Exhibit 4
CITY LOAN AGREEMENT
byandbetween
THE CITY OF CARLSBAD
and
POINSETTIA HOUSING ASSOCIATES, a California Limited Partnership
Poinsettia Garden Apartments
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J B OF CONTE;$TTs
ARTICLE 1 DEFINITIONS AND EXHIBITS ............................................................................... 1
1.1 Definitions ..................................................................................................................... 1
1.2 Exhibits ......................................................................................................................... 3
ARTICLE 2 LOAN .......................................................................................................................... 4
2.1 Amount ......................................................................................................................... 4
2.2 Interest ........................................................................................................................... 4
2.3 Repayment .................................................................................................................... 4
2.4 Prepayment ................................................................................................................... 6
2.5 Assumption ................................................................................................................... 6
2.6 Loan Disbursement ....................................................................................................... 6
2.7 Use of Loan Proceeds ................................................................................................... 6
2.8 Security for Loan .......................................................................................................... 6
2.9 Approval of Additional Financing ................................................................................ 6
2.10 Subordination of Deed of Trust. ................................................................................. 7
2.11 Subordination of the City Regulatory Agreement . ..................................................... 7
2.12 Reports and Accounting of Surplus Cash. .................................................................. 7
2.13 Developer Fee; Use of Net Proceeds of Permanent Financing ................................... 8
ARTICLE 3 DISBURSEMENT OF LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.1 Conditions Precedent to Disbursement of Loan Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.2 Procedure for Disbursement of Loan Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE 4 DEVELOPMENT OF THE IMPROVEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.1 Commencement of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.2 Completion of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.3 Construction Pursuant to Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Construction in Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 Entry by the City . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Equal Opportunity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.7 Mechanics Liens, Stop Notices, and Notices of Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Certificate of Completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE 5 REPRESENTATIONS AND WARRANT IES OF BORROWER ........................... 12
5.1 Representations and Warranties.. ................................................................................ 12
ARTICLE 6 CONTINUING OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..*..................................... 13
6.1 Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.2 Compliance with Loan Documents. Borrower shall comply with all the terms and provisions of the Loan Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Rental of Units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.4 Required Insurance Coverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Insurance Policies and Premiums . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.6 Proceeds of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
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6.7 Taxes and Assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
6.8 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.9 Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.10 Notification of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.11 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.12 Hazardous Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.13 Non-Discrimination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
6.14 Mandatory Language in All Subsequent Deeds, Leases and Contracts . . . . . . . . . . . . . . . . . . . . 17
6.15 Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
6.16 Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE 7 DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.3 Right of Contest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ..~............................................................. 21
7.4 Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
7.5 Waiver of Terms and Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 8 MISCELLANEOUS ................................................................................................ .22
8.1 Time ............................................................................................................................ 22
8.2 Force Majeure ............................................................................................................. 22
8.3 Notices . ....................................................................................................................... 22
8.4 Attorneys’ Fees ............................................................................................................ 23
8.5 No Third Parties Benefited ......................................................................................... 23
8.6 Actions ........................................................................................................................ 23
8.7 Signs ............................................................................................................................ 23
8.8 Successors and Assigns ............................................................................................... 23
8.9 Construction of Words ................................................................................................ 23
8.10 Partial Invalidity ........................................................................................................ 23
8.11 Governing Law ......................................................................................................... 24
8.12 Amendment ............................................................................................................... 24
8.13 Captions and Headings ............................................................................................. 24
8.14 Action by the City ..................................................................................................... 24
Exhibit A - Legal Description of the Land
Exhibit B - City Note
Exhibit C - City Regulatory Agreement
Exhibit D - City Deed of Trust
Exhibit E - Permitted Uses of Loan Proceeds
Exhibit F - Form of Estoppel Certificate of Completion
ii
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L
MEMO
December 14,1998
TO: NOTE TO FILE
FROM: Kathleen D. Shoup, City Clerk’s Office, Ext. 5106
SUBJECT: POINSETTIA GARDENS APARTMENTS DOCUMENTS
FINANCIAL ASSISTANCE -AFFORDABLE HOUSING PROJECT
The issuance of multi-family bonds, loan agreement, note, deed of trust and
regulatory agreement were approved in “concept” by the City Council.
The actual documents will be processed at a later date by staff in the Housing &
Redevelopment Department.
CITY LOAN AGREEMENT
This City Loan Agreement (“the Agreement”) is entered into as of this -3 1998, by and between the City of Carlsbad (the “City”) and Poinsettia Housing Associates, a
California Limited Partnership (the “Borrower”).
RECITALS
1. Pursuant to Title 21, Chapter 21.85 of the Carlsbad Municipal Code, the City has
established a Housing Trust Fund administered by the City and used for the purpose of providing funding assistance for the provision of affordable housing consistent with the policies and
programs contained in the Housing Element of the City’s General Plan.
2. Borrower desires to construct ninety-two (92) residential units in the City of
Carlsbad, of which at least forty-five (45) shall be rented to low income households at affordable
housing cost and the remainder, excluding a manager’s unit, shall be rented to moderate income
households at affordable housing cost.
3. The City desires to provide financial assistance to Borrower for development
costs in the form of a loan for a total amount not to exceed Nine Hundred Twenty Thousand Dollars ($920,000) (the “City Loan”). The funds utilized to fund the City Loan are Housing
Trust Fund monies and are not federal funds or the proceeds of a tax-exempt bond issue.
The City intends to utilize the development to obtain affordable housing
product:on credits for the Agency pursuant to Health and Safety Code Section 33413(b)(2)(A)(ii)
as newly constructed housing units located outside of the Carlsbad Village Redevelopment Area
(the “Redevelopment Area”) and available at affordable housing cost to low and moderate income households. Such units are required to remain affordable to such households for not less
than the period of the land use controls established in the Redevelopment Plan for the
Redevelopment Area. This Agreement and the accompanying City Regulatory Agreement are
also intended to implement this requirement.
ARTICLE 1
DEFINITIONS AND EXHIBITS
1.1 . . Defimtlons. The following terms shall have the following meanings in this
Agreement:
(4 “Agreement” shall mean this City Loan Agreement.
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@I “Agency” shall mean the Carlsbad Redevelopment Agency,
Carlsbad, California, a public body corporate and politic.
(4 Limited Partnership.
“Borrower” shall mean Poinsettia Housing Associates, a California
(4 “Certificate of Completion” shall have the meaning set forth in Section 4.8 of this Agreement.
(e) “City Deed of Trust” shall mean the deed of trust to be placed on
the Development, in substantially the form shown in Exhibit D attached hereto and incorporated
herein, securing the City Note and naming the City as beneficiary.
(0 “City Loan” shall mean the loan for an amount not to exceed Nine
Hundred Twenty Thousand Dollars ($920,000) by the City to Borrower, which loan is the
subject of this Agreement.
(g) “City Note” shall mean the promissory note, in substantially the
form shown in Exhibit B attached hereto and incorporated herein, in the principal amount of
Nine Hundred Twenty Thousand Dollars ($920,000), evidencing the City Loan.
09 “City Regulatory Agreement” shall mean the City Regulatory
Agreement in the form attached as Exhibit C to this Agreement to be recorded against the Land
pursuant to Section 3.1 below.
(i) “Construction and Permanent Financing” shall mean any of the
following financing acquired by the Borrower for the purpose of financing the Improvements and
approved by the City, in addition to the City Loan:
(0 City multifamily housing revenue bond-financed loan in
the approximate amount of Six Million Five Hundred Thousand
Dollars ($6,500,000) (the “City Bond Loan ‘I);
(ii) Master developer cash contribution in the approximate
amount of Nine Hundred Thousand Dollars ($900,000); and
(iii) Tax credit investor equity funds in the approximate amount
of Two Million Seven Hundred Twenty Six Thousand Seven
Hundred Forty-Four Dollars ($2,726,744).
Ci) constructed on the Land.
“Development” shall mean the Land and Improvements to be
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(k) “Improvements” shall mean the buildings and improvements to be
constructed on the Land, including the Units, and the parking spaces and landscaping
appurtenant to such buildings and improvements.
(1) “Land” shall mean the property on which the Borrower shall construct the
Improvements, which property is more particularly described in &&i.l&A attached hereto and
incorporated herein.
W “Loan Amount” shall mean the amount loaned to Borrower pursuant to
Section 2.1 below.
(n) “Loan Documents” shall mean the following documents evidencing the
City Loan: (i) the City Note; (ii) the City Regulatory Agreement; (iii) the City Deed of Trust;
(iv) this Agreement.
(0) “Parties” shall mean the City and the Borrower.
CP> “Partnership” shall mean a limited partnership in which the Borrower or a
nonprofit affiliate of the Borrower is the general partner.
Cd “Term” shall mean the term of the City Loan commencing on the date of disbursement of the Loan Amount and ending fifty-five (55) years following the date of issuance
of a certificate of occupancy for all Units in the Development, but in no event later than June 30,
2055.
09 “Unit” shall mean one of the ninety-two (92) dwelling units located
within the Development.
1.2 E&&i& The following Exhibits are attached to this Agreement and
incorporated herein:
Exhibit A - Legal Description of the Land
Exhibit B - City Note
Exhibit C - City Regulatory Agreement
Exhibit D - City Deed of Trust
Exhibit E - Permitted Uses of Loan Proceeds
Exhibit F - Form of Certificate of Completion
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ARTICLE 2
LOAN
2.1 Amount. The City hereby agrees to loan, and the Borrower hereby agrees to
borrow, an amount not to exceed Nine Hundred Twenty Thousand Dollars ($920,000), subject to
the terms and conditions set forth in this Agreement, and subject further to the terms and
conditions set forth within the documents and instruments executed by the Borrower in
connection with this transaction, including:
(a) The City Note;
The City Regulatory Agreement; and
(cl The City Loan Deed of Trust.
2.2 M. The outstanding principal amount of the Loan shall accrue simple
interest at three percent (3%) per annum.
2.3 l&uyag&
(a) Repayment of the Loan shall be deferred during construction of the
Improvements. Commencing on the date of issuance by the City of a certificate of occupancy
for all Units in the Development, the outstanding principal and accrued interest on the City Loan
shall be amortized over the next fifty-five (55) years of the Term such that equal payments of
principal and interest (the “Amortized Payments”) shall be due and payable on July 1 of each
calendar year, commencing on the first May 1 following recordation of the deed of trust securing the Permanent Loan; provided however, that the Amortized Payments shall be due and payable
only to the extent of seventy percent (70%) of Surplus Cash (as defined below) generated by the
Development in the previous calendar year.
03 “Surplus Cash” means, in a particular calendar year, the amount by which
Gross Revenue (as defined below) exceeds Annual Operating Expenses (as defined below).
(9 Gross Revenue. “Gross Revenue,” with respect to a particular
calendar year, shall mean all revenue, income, receipts, and other
consideration actually received from operation and leasing of the
Development. “Gross Revenue” shall include, but not be limited to: all
rents, fees and charges paid by tenants, Section 8 payments or other rental
subsidy payments received for the dwelling units, deposits forfeited by
tenants, all cancellation fees, price index adjustments and any other rental
adjustments to leases or rental agreements; proceeds from vending and
laundry room machines; the proceeds of business interruption or similar
insurance; the proceeds of casualty insurance to the extent not utilized to
repair or rebuild the Development; and condemnation awards for a taking
4
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of part or all of the Development for a temporary period. “Cross
Revenue” shall also include the fair market value of any goods or services
provided in consideration for the leasing or other use of any portion of the
Development. “Cross Revenue” shall not include tenants’ security
deposits, loan proceeds, capital contributions or similar advances.
(ii) Annual Operating Expenses. “Annual Operating Expenses,” with
respect to a particular calendar year shall mean the following costs
reasonably and actually incurred for operation and maintenance of the
Development to the extent that they are consistent with an annual
independent audit performed by a certified public accountant using
generally accepted accounting principles: property and other taxes and
assessments imposed on the Development; premiums for property
damage and liability insurance; utility services not paid for directly by
tenants, including but not limited to water, sewer, trash collection, gas
and electricity; maintenance and repair including but not limited to pest
control, landscaping and grounds maintenance, painting and decorating,
cleaning, common systems repairs, general repairs, janitorial, supplies,
and others; any annual license or certificate of occupancy fees required
for operation of the Development; general administrative expenses
including but not limited to advertising and marketing, security services
and systems, and professional fees for legal, audit and accounting;
property management fees and reimbursements including on-site
manager expenses, not to exceed fees and reimbursements which are
standard in the industry; asset management/partnership management fees in an annual amount approved by the City; deferred developer fees in an
amount approved by the City; cash deposited into a reserve for capital
replacements of Development improvements and an operating reserve in
such reasonable amounts as are required by Development lenders and/or
equity investors, and approved by the City; and debt service payments on
fmancing for the Development approved by the City, including the
financing described above in Section 1.1 (i) (excluding debt service due
from residual receipts or surplus cash of the Development). “Annual Operating Expenses” shall not include the following: depreciation,
amortization, depletion or other non-cash expenses or any amount
expended from a reserve account.
(4 In the event that seventy percent (70%) of Surplus Cash in any year is less
than the amount of the Amortized Payment due on May 1 of the following year, the difference
between the amount of seventy percent (70%) of Surplus Cash and the Amortized Payment shall
accrue with simple interest at three percent (3%) per annum, and shall be paid on the next May 1
when and to the extent Surplus Cash becomes available. All payments on the City Loan shall be
applied first to accrued, but unpaid, amounts for prior years and then to the current Amortized
Payment due, beginning with the earliest year for which an Amortized Payment accrued.
5
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34
(d) In the event that seventy percent (70%) of Surplus Cash in any year
exceeds the amount necessary to make the Amortized Payment due on May 1 of the following
calendar year, plus any amounts due pursuant to subsection (c) above, such excess amount shall
be paid to the City as prepayment of the City Loan. Such prepayment shall not reduce the
amounts of subsequent Amortized Payments due, except to the extent that the City Loan is filly
repaid.
(e) Prepayment of the City Loan may also occur pursuant to Section 2.13
below. Such prepayment shall not reduce the amounts of subsequent Amortized Payments due,
except to the extent the City Loan is lily repaid.
(0 Any portion of the principal and interest on the City Loan not sooner paid
shall be due and payable upon the earlier of: (i) the occurrence of an Event of Default hereunder;
(ii) expiration of the Term; or (iii) sale or transfer of the Development other than a transfer
described in Section 2.5 below.
2.4 Prepam. Borrower may prepay the principal and any interest due the City
under the City Note prior to or in advance of the time for payment thereof as provided in the City
Note, without penalty; provided, however, that Borrower acknowledges that the provisions of the
City Regulatory Agreement will be applicable to the Development throughout the term of the
City Regulatory Agreement even though Borrower may have prepaid the City Note.
2.5 . w. The Loan shall not be assumable by any transferee, except a
transferee meeting the requirements of Section 6.16(c) below.
2.6 Disbm. Upon satisfaction of the preconditions to disbursement set
forth in Sections 3.1 below and pursuant to the disbursement procedures set forth in Sections 3.1
and 3.2 below, the City will disburse to Borrower the Loan Amount.
2.7 Use of Lpimn Proceeds. Borrower shall use Loan Proceeds only to pay the costs of
the items set forth in m.
2.8 &u&&r Jooag. The Loan shall be secured by the City Deed of Trust on the
Development. The Borrower shall provide the City with an ALTA lenders policy of title
insurance insuring the City Deed of Trust as a lien against the Development, subject only to the
lien or liens of the Mortgages recorded in connection with the City Bond Loan described above
in Section 1.1(i). If Borrower holds a leasehold interest in the Land, the City Deed of Trust shall
encumber the fee and leasehold interests in the Land and the form of the City Deed of Trust
shown in mbit D shall be modified to reflect the existence of a ground lease. The form of any
ground lease shall be subject to review and approval by the City, which approval shall not be
withheld unreasonably.
2.9 val . . . of B . The Borrower shall not place any
encumbrances on the Development other than the Construction and Permanent Financing
without the prior written consent of the City, which consent shall not be withheld unreasonably.
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2.10 Subordination of Deed of Trust. The City agrees to subordinate the City Deed of
Trust to the lien of the deeds of trust securing the City Bond Loan.
. . 2.11 jolva. The City agrees that the City’s
Housing and Redevelopment Manager shall subordinate the City Regulatory Agreement to the
lien or encumbrance of any private construction or permanent financing provided for the
Development upon the finding of the City’s Housing and Redevelopment Manager that (i) an
economically feasible loan is not reasonably available on comparable terms and conditions
without subordination, and (ii) the mortgage to which the City Regulatory Agreement is being
subordinated contains provisions meeting the requirements of Health and Safety Code Section
33334.14(a) reasonably designed to protect the City’s and Agency’s interests in the event of
default under such mortgage. The City agrees that the City Regulatory Agreement shall be
subordinated to any federal or state governmental agency regulating the Development which
requires that the City Regulatory Agreement be subordinate to such government agency’s documents and liens. The City will execute subordination agreements in a form reasonably
acceptable to the City and the lending entity or government agency requesting subordination of
the City Regulatory Agreement as provided in this Section.
2.12 &ports a& Accob of SW.
(a) mStatement. In connection with the annual repayment of the
City Loan, the Borrower shall furnish to the City within one hundred and fifty (150) days after
the end of the calendar year an audited statement duly certified by an independent firm of
certified public accountants approved by the City, setting forth in reasonable detail the
computation and amount of Surplus Cash during the preceding calendar year.
0-J) Rooks an&Recor&. The Borrower shall keep and maintain at the location of the
Development, or elsewhere with the City’s written consent, full, complete and appropriate books,
records and accounts relating to the Development, including all such books, records and accounts
necessary or prudent to evidence and substantiate in full detail Borrower’s calculation of Surplus
Cash. Books, records and accounts relating to Borrower’s compliance with the terms, provisions,
covenants and conditions of this Agreement shall be kept and maintained in accordance with generally accepted accounting principles consistently applied, and shall be consistent with
requirements of this Agreement which provide for the calculation of Surplus Cash on a cash
basis. All such books, records, and accounts shall be open to and available for inspection by the City, its auditors or other authorized representatives at reasonable intervals during normal
business hours and upon five (5) days prior written notice to Borrower. Copies of all tax returns
and other reports that Borrower may be required to furnish any governmental agency shall at all
reasonable times be open for inspection by the City at the place that the books, records and
accounts of the Borrower are kept and upon 5 days prior written notice to Borrower. The
Borrower shall preserve records on which any statement of Surplus Cash is based for a period of not less than five (5) years after such statement is rendered.
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2.13 Develouer Fee; Use of Net Proceeds of Permanent Financing.
(a) The maximum cumulative developer fee that may be paid to any entity or
entities providing development services to the Development, whether paid up-front or on a
deferred basis, at the discretion of the Developer, shall not exceed Eight Hundred Nineteen
Thousand Dollars ($8 19,000.
0-J) For purposes of this Section 2.13, the term “Net Proceeds of Permanent
Financing” shall mean the portion of the capital contributions of the investor limited partner of
the Partnership and the proceeds of the City Bond Loan that are not required to pay the costs of
development of the Development (including but not limited to the funding of reserves and the
funding of mandatory redemptions of the City Bond Loan, but excluding any Deferred Developer
Fee. For purposes of this Section 2.13 the term “Deferred Developer Fee” shall mean any
portion of the developer fee shown in the development budget approved by the City pursuant to
Section 3.1(a) below as paid after (insert date).
follows: Cc) The Net Proceeds of Permanent Financing shall be utilized as
(0 Borrower may retain one-half of the Net Proceeds of
Permanent Financing, and, shall utilize such funds to pay part or all of the Deferred Developer
Fee, and if the Deferred Developer Fee is entirely paid, other fees as approved by the City; and
(ii) One-half of the Net Proceeds of Permanent Financing shall
be paid to the City as a partial prepayment of the City Loan.
69 The amount of Net Proceeds of Permanent Financing shall be
determined on (insert date). The Borrower shall submit documentation to the City sufficient to
verify the amount of the Net Proceeds of Permanent Financing.
ARTICLE 3
DISBURSEMENT OF LOAN
3.1 Conditions Precedent to Disbursement of Loan Proceeds. The City shall
not disburse Loan proceeds to the Borrower until all of the following conditions precedent are
satisfied.
6) Budget. Borrower shall have submitted to the City and obtained
City approval of a development budget for the Development, and the City has determined that
the undisbursed proceeds of the City Loan, together with other funds or firm commitments for
funds that the Borrower has obtained in connection with the Development, are not less than the
amount that the City determines is necessary to pay for the construction of the Development and to satisfy all of the covenants contained in this Agreement.
Co) . . . rate Au-on. Good Sa . Borrower shall have provided
the City with a certified copy of a corporate authorizing resolution of the Borrower or, if the loan
has been assigned to the Partnership, the general partner of the Partnership, approving the Loan
and the Borrower’s execution of all Loan Documents, and with evidence reasonably satisfactory
to the City that the Borrower exists in good standing at the time of the proposed disbursement.
w B of J,&. Borrower shall hold fee or leasehold title to the Land.
(4 . Close of CB. Borrower shall have closed the City Bond
Loan, or such loan shall close concurrently with the City Loan.
09 Execution.tion of Documts . Borrower shall have executed and delivered to the City the City Note, the City Deed of Trust, and the City Regulatory
Agreement, and any other documents and instruments required to be executed and delivered, all
in form and substance satisfactory to the City, and the City Deed of Trust and the City
Regulatory Agreement shall have been recorded against the Development.
(0 m. Borrower shall have furnished the City with evidence of the
insurance coverage required pursuant to Sections 6.4 and 6.5 below.
(g) Bonds. Prior to any disbursement for hard construction costs, the City has
received copies of labor and material (payment) bonds and performance bonds, or a dual bond
which covers both payment and performance obligations, with respect to the construction of the
Development in a penal sum each of not less than one hundred percent (100%) of the scheduled
cost of construction. Such bonds must be issued by an insurance company reasonable acceptable
to the City and must name the City as a co-obligee.
(h) m . Prior to any disbursement for hard construction
costs, the City has received and approved all contracts that the Borrower has entered or proposed
to enter into for construction of the Development. All construction work and professional
services shall be performed by persons or entities licensed or otherwise authorized to perform the
applicable construction work or service in the State of California. Each contract that the
Borrower enters for construction of the Development shall provide that at least ten percent (10%)
of the costs incurred shall be payable only upon completion of said contractor’s construction
(unless an early release of retention to specified subcontractors has been approved by the City)
and shall include the nondiscrimination language set forth in Section 6.14 below.
(0 No Defiual. There shall exist no condition, event or act constituting an
Event of Default (as hereinafter defined) hereunder or which, upon the giving of notice or the
passage of time, or both, would constitute an Event of Default.
3.2 Procedure for Dism of J mm Pro=& . Upon satisfaction of the
conditions set forth in Section 3.1 above, the City shall promptly, but in no event later than five
(5) business days after receiving Borrower’s written request and any required documentation
disburse the Loan Amount to Borrower from time to time, but in no event more than monthly (if
Borrower requests), upon receipt of written requests from the Borrower: reaffirming the
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accuracy as of the date of the disbursement request of Borrower’s representation, and warranties
set forth in Article 5 below; (b) certifying that Borrower is not in default under the City Loan
Documents or loan documents for other Construction and Permanent Financing; and (c) setting
forth the proposed uses of funds consistent with Section 2.7 above, the amount of funds needed,
and, where applicable, a copy of the bill or invoice covering a cost incurred or to be incurred.
When a disbursement is requested to pay any contractor in connection with the Development, the
written request must be accompanied by certification by Borrower that the work for which
disbursement is requested has been completed (although the City reserves the right to inspect the
Development and make an independent evaluation), and lien releases and/or mechanics lien title
insurance endorsements reasonably acceptable to the City.
ARTICLE 4 _
DEVELOPMENT OF THE IMPROVEMENTS
4.1 of Con&-uctron. Subject to Section 8.2 below, the Borrower
hereby covenants and agrees to commence construction of the Development no later than thirty
(30) days following the recordation of the City Deed of Trust.
4.2 ct1m . The Borrower hereby covenants and agrees to
diligently prosecute to completion the construction of the Development within 0 months from the date of commencement of construction, subject to Section 8.2 below.
4.3 Construction P-t to Pm. The Borrower shall construct the Improvements
in accordance with the plans approved by the City in connection with issuance of the building
permit, and with the terms and conditions of all land use permits and approvals required by the
City.
4.4 . . ion m Cece with J,aw. The Borrower shall cause all work
performed in connection with the Development, including construction of the Improvements, to
be performed in compliance with all governmental requirements, including (without limitation
and where applicable) the following:
(a) The prevailing wage provisions of Sections 1770 et seq. of the California
Labor Code and implementing rules and regulations, if applicable.
09 All directions, rules, and regulations of any fire marshal, health officer,
building inspector, or other officer of any governmental agency having jurisdiction.
The work shall proceed only after procurement of each permit, license, or other authorization
that may be required by any governmental agency having jurisdiction, and the Borrower shall be
responsible to the City for the procurement and maintenance thereof, as may be required of the
Borrower and all entities engaged in work on the Development.
4.5 by the C&y. Borrower shall permit the City, through its officers, agents, or employees, at all reasonable times and upon three (3) business days prior written notice to enter
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into the Development and inspect the work of construction to determine that the same is in
conformity with the construction plans approved by the City. Borrower acknowledges that the
City is under no obligation to supervise, inspect, or inform Borrower of the progress of
construction, and Borrower shall not rely upon the City therefor. Any inspection by the City is
entirely for its purposes in determining whether Borrower is in default under this Agreement and
is not for the purpose of determining or informing Borrower of the quality or suitability of
construction. Borrower shall rely entirely upon its own supervision and inspection in
determining the quality and suitability of the materials and work, and the performance of
architects, subcontractors, and material suppliers.
4.6 . Equal . During the construction of the Improvements there shall be
no discrimination on the basis of race, color, creed, religion, sex, sexual orientation, marital
status, national origin, ancestry, or handicap in the hiring, firing, promoting, or demoting of any
person engaged in the construction work.
ens. Stan Notices. and Now of Completion
(a) If any claim of lien is filed against the Land or a stop notice affecting the City Loan is served on the City or any other lender or other third party in connection with the
Development, then the Borrower shall, within twenty (20) days after such filing or service, either
pay and fully discharge the lien or stop notice, effect the release of such lien or stop notice by
delivering to the City a surety bond in sufficient form and amount, or provide the City with other
assurance satisfactory to the City that the claim of lien or stop notice will be paid or discharged.
(b) If the Borrower fails to discharge any lien, encumbrance, charge, or claim
in the manner required in Section 4.7(a), then in addition to any other right or remedy, the City
may (but shall be under no obligation to) discharge such lien, encumbrance, charge, or claim at
the Borrower’s expense. Alternately, the City may require the Borrower to immediately deposit
with the City the amount necessary to satisfy such lien or claim and any costs, pending resolution
thereof The City may use such deposit to satisfy any claim or lien that is adversely determined
against the Borrower.
(c) The Borrower shall file a valid notice of cessation or notice of completion
upon cessation of construction on the Development for a continuous period of thirty (30) days or
more, and take all other reasonable steps to forestall the assertion of claims of lien against the
Land. The Borrower authorizes the City, but without any obligation, to record any notices of
completion or cessation of labor, or any other notice that the City deems necessary or desirable
to protect its interest in the Development.
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4.8 Certifjcate of Completion. When the Borrower has determined it has met its
obligations under this Article 4, the Borrower may request that the City issue a Certificate of
Completion, in the form shown in Exhibit F. Within ten (10) days of such a request, the City
shall issue a Certificate of Completion or shall provide the Borrower with a written explanation
of its refusal to issue the Certificate of Completion. If and when the Borrower has taken the
specified measures or met the specified standards, the City shall issue a Certificate of
Completion.
The Certificate of Completion shall not be deemed a notice of completion under the
California Civil Code, nor shall it constitute evidence of compliance with or satisfaction of any
obligation of the Borrower to any holder of a deed of trust securing money loaned to finance the
Development.
ARTICLE 5
REPRESENTATIONS AND WARRANT IES OF BORROWER
5.1 &presentations . Borrower hereby represents and warrants to the
City as follows:
(a) _Oreanization. Borrower is duly formed, validly existing and in good
standing under the laws of the State of California and has the power and authority to own its
property and carry on its business as now being conducted.
(b) Authority of Borrower. Borrower has full power and authority to execute
and deliver this Agreement and to make and accept the borrowings contemplated hereunder, to
execute and deliver the Loan Documents and all other documents or instruments executed and
delivered, or to be executed and delivered, pursuant to this Agreement, and to perform and
observe the terms and provisions of all of the above.
w . Authoritv of persons ~~~~ nocuments . This Agreement and the
Loan Documents and all other documents or instruments executed and delivered, or to be
executed and delivered, pursuant to this Agreement have been executed and delivered by persons
who are duly authorized to execute and deliver the same for and on behalf of Borrower, and all
actions required under Borrower’s organizational documents and applicable governing law for
the authorization, execution, delivery and performance of this Agreement and the Loan
Documents and all other documents or instruments executed and delivered, or to be executed and
delivered, pursuant to this Agreement, have been duly taken.
(d) Yalid Bins . This Agreement and the Loan Documents
and all other documents or instruments which have been executed and delivered pursuant to or in
connection with this Agreement constitute or, if not yet executed or delivered, will when so
executed and delivered constitute, legal, valid and binding obligations of Borrower.
(e) Pending Proceeu. There are no claims, actions, suits or proceedings pending or, to the knowledge of Borrower, threatened against or affecting Borrower or the
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Development, at law or in equity, before or by any court, board, commission or agency
whatsoever which might, if determined adversely to Borrower, materially affect Borrower’s
ability to repay the City Loan or impair the security to be given to the City pursuant hereto.
(f) m. The financial statements of Borrower and other
financial data and information furnished by Borrower to the City fairly present the information
contained therein. As of the date of this Agreement, there has not been any adverse, material
change in the financial condition of Borrower from that shown by such financial statements and
other data and information.
ARTICLE 6
CONTINUING OBLIGATIONS
6.1 e. The Borrower shall comply with the provisions of this Article 6
throughout the Term.
6.2
provisions of the Loan Documents.
. Borrower shall comply with all the terms and
6.3 of ‘I Jr&. The Borrower shall comply with the occupancy and affordability
restrictions for the rental of the Units as set forth in the City Regulatory Agreement.
6.4 -Insurance Covaagg.
(a) Fire and EW Covera&ndorsm. The Borrower shall during the
Term keep the Development insured against loss or damage by a standard all risk policy in
amounts not less than the replacement value of the Development, or should insurance in such
amount not be reasonably and commercially available, such lesser amount as may be acceptable
to the City. The amount of such insurance shall be adjusted by reappraisal of the Improvements
by the insurer or its designee .at least once every five (5) years during the Term, if requested by
the City. If an all risk policy insuring the full replacement value of the Development is not
reasonably and commercially available, the Borrower shall use best efforts to obtain and
maintain an extended coverage endorsement that ensures the full replacement value of the
Development as soon as such coverage becomes commercially and reasonably available.
@I --ProDem Damage . During the Term, the Borrower
shall keep in full force and effect a policy or policies of comprehensive general liability and
property damage insurance against liability for bodily injury to or death of any person or
property damage arising out of an occurrence on or about the Development. The limits of such insurance shall be not less than one million dollars ($1 ,OOO,OOO) combined single limit for bodily
injury and property damage. The limits of the insurance shall be adjusted once every five (5)
years if and as reasonably required by the City.
(c) mt>ensation . The Borrower shall carry or cause to
be carried workers’ compensation insurance covering all persons employed by the Borrower in
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connection with the Development and with respect to whom death, bodily injury, or sickness
insurance claims could be asserted against the Borrower or the City.
(d) v. During the course of any alteration, construction
or reconstruction, the cost of which exceeds one hundred thousand dollars ($lOO,OOO), the
Borrower shall provide or require any contractor to provide builders’ risk insurance for not less
than, in the event of new construction, the full insurable value of the Development or, in the
event of alteration or reconstruction, the insurable value of the alteration or reconstruction,
insuring the interests of the City, the Borrower and any contractors and subcontractors.
6.5 . Prm .
(a) All liability policies required by this Agreement shall name the City as an
additional insured. Duplicate copies of such policies or certificates of such insurance shall be
promptly furnished to the City.
(b) To the extent obtainable, any policy of insurance shall provide that any
change or cancellation of said policy must be made in writing and sent to the Borrower and the
City at their respective principal offices at least thirty (30) days before the effective date of any
change or cancellation.
6.6 Proceeds of.
All fire and standard risk or extended coverage (casualty) insurance proceeds shall be
applied to the payment of the costs of repairing or rebuilding that part of the Development
damaged or destroyed if(i) the Borrower agrees in writing within ninety (90) days after payment
of the proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each
lender of an outstanding Construction and Permanent Loan permits such repairing or rebuilding,
provided that the extent of Borrower’s obligation to restore the Development shall be limited to
the amount of the insurance proceeds. If the Development is not repaired or rebuilt as provided
in this Section 6.6, all such proceeds shall be applied to repayment of outstanding loans
including this City Loan, in the order of lien priority.
6.7 Taxes and e. So long as Borrower owns the Development, Borrower
shall pay all real and personal property taxes, assessments and charges and all franchise, income,
unemployment, old age benefit, withholding, sales, and other taxes assessed against it, or payable
by it, at such times and in such manner as to prevent any penalty from accruing, or any lien or
charge from attaching to the Development; provided, however, that Borrower shall have the right
to contest in good faith any such taxes, assessments, or charges. In the event Borrower exercises
its right to contest any tax, assessment, or charge against it, Borrower, on final determination of the proceeding or contest, shall immediately pay or discharge any judgment rendered against it,
together with all costs, charges, and interest. The City acknowledges that Borrower intends to
apply for a property tax exemption for the Development pursuant to Revenue and Taxation
Section 214(g).
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6.8 ws . Borrower shall comply with all laws and regulations of
the United States and of California and of any political subdivision thereof, or of any
governmental authority which may be applicable to it or to its business, subject to Borrower’s
right to contest the validity or applicability of laws or regulations.
6.9 w. Borrower shall promptly notify the City in writing of any changes in the location of any place of business or material assets of the Borrower.
6.10 Notification of w. Borrower shall promptly notify the City in writing of
any litigation affecting the Borrower or the Development and of any claims or disputes that
involve a material risk of litigation, which may materially adversely affect the City Loan.
6.11 w. Borrower shall defend, indemnify, save and hold the City and the
Agency, their councihnembers, boardmembers, officers, employees, agents, and contractors,
utilizing attorneys approved by the City, harmless from any and all claims, actions, demands,
costs, expenses, and reasonable attorneys’ fees, arising out of, attributable to, or otherwise
occasioned, in whole or in part, by any act or omission of Borrower arising from or related to the
Development, except as such claim may arise from the negligence or willful misconduct of an
indemnified party. This Section 6.11 shall not operate to impose personal liability on Borrower
or its partners for nonpayment of principal and interest under the City Note.
6.12 -dous IQ&j& .
(a) The Borrower shall keep and maintain the Development in compliance
with, and shall not cause or permit the Development to be in violation of, any federal, state, or
local laws, ordinances, or regulations relating to industrial hygiene or to the environmental
conditions on or under the Development, including (but not limited to) soil and ground water
conditions. The Borrower shall not use, generate, manufacture, store, or dispose of, on, under, or
about the Development, or transport to or from the Development, any flammable explosives,
radioactive materials, hazardous wastes, toxic substances, or related materials, including (without
limitation) any substances defined as or included in the definition of “hazardous substances,”
“hazardous wastes,” “hazardous materials,” or “toxic substances” under any applicable federal or
state laws or regulations (collectively referred to as “Hazardous Materials”) except such of the
foregoing as may be customarily and lawfully kept and used in and about multifamily residential
property-
(b) The Borrower shall immediately advise the City in writing if at any time
it receives written notice of(i) any and all enforcement, cleanup, removal, or other governmental
or regulatory actions instituted, completed, or threatened against the Borrower or the
Development pursuant to any applicable federal, state, or local laws, ordinances, or regulations
relating to any Hazardous Materials (“Hazardous Materials Law”); (ii) all claims made or
threatened by any third party against the Borrower or the Development relating to damage,
contribution, cost recovery compensation, loss, or injury resulting from any Hazardous Materials (the matters set forth in clauses (i) and (ii) above are referred to as “Hazardous Materials
Claims”); and (iii) the Borrower’s discovery of any occurrence or condition on any real property
adjoining or in the vicinity of the Development that could cause the Development or any part
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thereof to be classified as “border-zone property” under California Health and Safety Code
Sections 25220 et seq. or corresponding regulations, or to be otherwise subject to any restrictions
on the ownership, occupancy, transferability, or use of the Development under any Hazardous
Materials Law.
(cl The Borrower shall permit the City to join and participate in, as a party if
it so elects, any legal proceedings or actions initiated in connection with any Hazardous
Materials. The Borrower shall indemnify, defend (with counsel reasonably chosen by the City,
at the City’s option), and hold harmless the City, and the Agency, and their respective
councihnembers, boardmembers, officers, agents, and employees from and against any loss, damage, cost, expense, or liability directly or indirectly arising out of or attributable to the use,
generation, storage, release, threatened release, discharge, disposal, or presence of Hazardous
Materials on or under the Development, including (without limitation): (i) all foreseeable
consequential damages; (ii) the costs of any required or necessary repair, cleanup, or
detoxification of the Development and the preparation and implementation of any closure,
remedial, or other required plans; and (iii) all reasonable costs and expenses incurred by the City
or the City in connection with clauses (i) and (ii), including (but not limited to) reasonable
attorneys’ fees. This paragraph shall survive termination of this Agreement.
60 Without the City’s prior written consent, which shall not be unreasonably
withheld, the Borrower shall not take any remedial action in response to the presence of any
Hazardous Materials on, under or about the Development, nor enter into any settlement
agreement, consent decree, or other compromise in respect to any Hazardous Material Claims, which remedial action settlement, consent decree or compromise might, in the City’s reasonable
judgement, impair the value of the City’s security hereunder; provided, however, that the City’s
prior consent shall not be necessary in the event that the presence of Hazardous Materials on,
under, or about the Development either poses an immediate threat to the health, safety, or
welfare of any individual or is of such a nature that an immediate remedial response is necessary
and it is not reasonably possible to obtain the City’s consent before taking such action, provided
that in such event the Borrower shall notify the City as soon as practicable of any action so
taken. The City agrees not to withhold its consent, where such consent is required hereunder, if
either (i) a particular remedial action is ordered by a court of competent jurisdiction, (ii) the
Borrower will or may be subjected to civil or criminal sanctions or penalties if it fails to take a
required action; (iii) the Borrower establishes to the reasonable satisfaction of the City that there
‘is no reasonable alternative to such remedial action which would result in less impairment of the
City’s security hereunder; or (iv) the action has been agreed to by the City.
03 The Borrower hereby acknowledges and agrees that (i) this Section 6.12
is intended as the City’s written request for information (and the Borrower’s response) concerning the environmental condition of the Development as required by California Code of Civil
Procedure Section 726.5, and (ii) each representation and warranty in this Agreement (together
with any indemnity obligation applicable to a breach of any such representation and warranty)
with respect to the environmental condition of the Development is intended by the Parties to be
an “environmental provision” for purposes of California Code of Civil Procedure Section 736.
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6.13 Non-Disc&l&&n. The Borrower covenants by and for itself and its successors
and assigns that there shall be no discrimination against or segregation of a person or of a group
of persons on account of race, color, religion, creed, sex, sexual orientation, marital status,
ancestry or national origin in the sale, lease, sublease, transfer, use, occupancy, tenure or
enjoyment of the Development, nor shall the Borrower or any person claiming under or through
the Borrower establish or permit any such practice or practices of discrimination or segregation
with reference to the selection, location, number, use or occupancy of tenants, lessees,
subtenants, sublessees or vendees in the Development. Pursuant to the terms of the City Regulatory Agreement, the foregoing covenant shall run with the land and shall survive
termination of this Agreement.
6.14 . mdatory w m All Subsea Dee-Leases Contra. The
Borrower and its agents shall not, in the selection or approval of tenants or provision of services
or in any other matter, discriminate against any person or group of persons on the grounds of
race, color, creed, religion, sex, sexual orientation, marital status, national origin, ancestry, age,
or disability. All deeds, contracts, or leases made or entered into by Borrower, its successors or
assigns, as to any portion of the Development shall contain the following language:
00
(b)
6)
In Deeds:
“Grantee herein covenants by and for itself, its successors and assigns that there shall be no discrimination against or segregation of a person or
of a group of persons on account of race, color, creed, religion, sex,
sexual orientation, marital status, national origin or ancestry in the sale,
lease, sublease, transfer, use, occupancy, tenure or enjoyment of the
property herein conveyed nor shall the grantee or any person claiming
under or through the grantee establish or permit any such practice or practices of discrimination or segregation with reference to the selection,
location, number, use or occupancy of tenants, lessees, subtenants,
sublessees or vendees in the property herein conveyed. The foregoing
covenant shall run with the land.”
In Contracts:
“There shall be no discrimination against or segregation of any person or
group of persons on account of race, color, creed, religion, sex, sexual
orientation, marital status, national origin or ancestry in the sale, transfer
or use of the property.”
In Leases:
“The lessee herein covenants by and for the lessee and lessee’s heirs,
personal representatives and assigns and all persons claiming under the
lessee or through the lessee that this lease is made subject to the condition
that there shall be no discrimination against or segregation of any person
or of a group of persons on account of race, color, creed, religion, sex,
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1
sexual orientation, marital status, national origin or ancestry in the leasing,
subleasing, transferring, use, occupancy, tenure or enjoyment of the land
herein leased nor shall the lessee or any person claiming under or through
the lessee establish or permit any such practice or practices of
discrimination or segregation with reference to the selection, location,
number, use or occupancy of tenants, lessees, sublessees, subtenants, or
vendees in the land herein leased.”
6.15 Records.
(4 The Borrower shall maintain complete, accurate, and current records
pertaining to the Development for a period of five (5) years after the creation of such records,
and shall permit any duly authorized representative of the City to inspect and copy records,
including records pertaining to income and household size of residents of the Development.
Such records shall include records regarding the occupancy and rent levels of the residential
units in the Development, as well as records that accurately and fully show the date, amount,
purpose, and payee of all expenditures drawn from Loan funds. Such records shall also include
all invoices, receipts, and other documents related to expenditures from the City Loan funds.
Records must be kept accurate and current.
(b) The City shall notify the Borrower of any records it deems insufficient.
The Borrower shall have fifteen (15) calendar days after the receipt of such a notice to correct
any deficiency in the records specified by the City in such notice, or if a period longer than
fifteen (15) days is reasonably necessary to correct the deficiency, then the Borrower shall begin
to correct the deficiency within fifteen (15) days and correct the deficiency as soon as reasonably
possible.
(c) The Borrower shall promptly comply with all requirements or conditions
of the City Loan Documents relating to notices, extensions, and other events required to be
reported or requested. The Borrower shall promptly supply, upon the request of the City, any
and all information and documentation involving the Development.
6.16 Transfers.
(a) For purposes of this Agreement, “Transfer” shall mean any sale,
assignment, or transfer, whether voluntary of involuntary, of(i) any rights and/or duties under
this Agreement, and/or (ii) any interest in the Development, including (but not limited to) a fee
simple interest, a joint tenancy interest, a life estate, a partnership interest, a leasehold interest, a
security interest, or an interest evidenced by a land contract by which possession of the
Development is transferred and the Borrower retains title. The term “Transfer” shall exclude the
leasing of any single unit in the Development to an occupant in compliance with the City
Regulatory Agreement.
09 No Transfer shall be permitted without the prior written consent of the
City, which the City shall not unreasonably withhold, provided that construction of the
Development has been completed, the proposed transferee meets the City’s reasonable standards
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regarding creditworthiness, and the proposed transferee has at least five (5) years experience in
the ownership, management, and operation of large affordable housing developments, without
any record of material violations of discrimination laws, housing codes, or other federal, state, or
local laws or regulations applicable to such developments. Pursuant to Section 2.3(e) above, the
City Loan shall automatically accelerate and be due in full upon any unauthorized Transfer.
(4 The City hereby approves a transfer of the Development from the
Borrower to the Partnership, and a subsequent transfer of the Development from the Partnership
back to the Borrower or to a nonprofit affiliate of the Borrower, provided that the transferee
expressly assumes the obligations of the Borrower under this Agreement, the City Note, the City
Deed of Trust and the City Regulatory Agreement, utilizing a form of assignment and
assumption agreement approved by the City.
(4 The City approves the grant of the security interests in the Development
in connection with the financing described in Section 1.1(h) above.
ARTICLE 7
DEFAULT AND REMEDIES
7.1 Events. Each of the following shall constitute an “Event of Default” by
Borrower under this Agreement:
(a) &&ure to Cm. Subject to Section 8.2, failure of Borrower to
construct all of the Development within the time set forth in Section 4.2 above;
(b) &&ire to I&&&e Pam. Failure to make prompt payments of the
principal and interest on the City Note when due and such failure having continued uncured for
thirty (30) days after receipt of written notice thereof to the Borrower from the City;
(4 &ch of Cove-. Failure by Borrower to duly perform, comply with,
or observe any of the conditions, terms, or covenants of any of the Loan Documents, and such
failure having continued uncured for thirty (30) days after receipt of written notice thereof by the
Borrower from the City or, if the breach cannot be cured within thirty (30) days, the Borrower
shall not be in breach so long as Borrower is diligently undertaking to cure such breach and such breach is cured within ninety (90) days; provided, however, that if a different period or notice
requirement is specified under any other section of this Article 7, the specific provisions shall
control.
w DefaultUnder Other J,ow. Failure to make any payment or perform any
of Borrower’s covenants, agreements, or obligations under the documents evidencing and
securing the Construction and Permanent Financing following expiration of all applicable notice
and cure periods.
(e) In.solvw. A court having jurisdiction shall have made or entered any
decree or order (i) adjudging Borrower to be bankrupt or insolvent, (ii) approving as properly
19
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filed a petition seeking reorganization of Borrower or seeking any arrangement for Borrower under the bankruptcy law or any other applicable debtor’s relief law or statute of the United
States or any state or other jurisdiction, (iii) appointing a receiver, trustee, liquidator, or assignee
of Borrower in bankruptcy or insolvency or for any of their properties, or (iv) directing the
winding up or liquidation of Borrower, if any such decree or order described in clauses (i) to (iv),
inclusive, shall have continued unstayed or undischarged for a period of ninety (90) days; or
Borrower shall have admitted in writing its inability to pay its debts as they fall due or shall have
voluntarily submitted to or filed a petition seeking any decree or order of the nature described in
clauses (i) to (iv), inclusive. The occurrence of any of the Events of Default in this paragraph
shall act to accelerate automatically, without the need for any action by the City, the
indebtedness evidenced by the Note. If the City Loan is assigned to the Partnership pursuant to
Section 6.16(c) below, the occurrence of any of the events described in this subsection with
respect to a general partner of the Partnership shall also constitute an Event of Default hereunder.
(f) Assignment: Attachment. Borrower (or, if the City Loan is assigned to the
Partnership, a general partner of Borrower) shall have assigned its assets for the benefit of its
creditors or suffered a sequestration or attachment of or execution on any substantial part of its
property, unless the property so assigned, sequestered, attached or executed upon shall have been
returned or released within ninety (90) days after such event or prior to sooner sale pursuant to
such sequestration, attachment, or execution. The occurrence of any of the events of default in
this paragraph shall act to accelerate automatically, without the need for any action by the City,
the indebtedness evidenced by the Note.
(g) v. Borrower (or, if the City Loan is assigned to the
Partnership, a general partner of Borrower) shall have voluntarily suspended its business or, if
the City Loan is assigned to the Partnership, the Partnership shall have been dissolved or
terminated, other than a technical termination of the Partnership for tax purposes.
(h) ti on Property & the Project There shall be filed any claim of lien
(other than liens approved in writing by the City) against the Development or any part thereof, or
any interest or right made appurtenant thereto, or the service of any notice to withhold proceeds
of the City Loan and the continued maintenance of said claim of lien or notices to withhold for a
period of twenty (20) days without discharge or satisfaction thereof or provision therefor
satisfactory to the City. In the event that Borrower is diligently working to remove a claim of lien or to remove a notice to withhold proceeds and the City’s interests under the Loan
Documents are not imminently threatened, the City shall not declare a default under this
subsection.
(0 . :ondemnatlon . The condemnation’ seizure, or appropriation of all or the
substantial part of the Land and the Development.
Six. (i) unauthorized . Any Transfer other than as permitted by Article
Q on or Waxr&.y&orrect . Any Borrower representation or
warranty contained in this Agreement, or in any application, financial statement, certificate, or
20
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report submitted to the City in connection with any of the City Loan Documents, proving to have
been incorrect in any material respect when made.
7.2 m. The occurrence of any Event of Default following the expiration of all
applicable notice and cure periods will, either at the option of the City or automatically where so
specified, relieve the City of any obligation to make or continue the City Loan and shall give the
City the right to proceed with any and all remedies set forth in this Agreement and the Loan
Documents, including but not limited to the following:
(a) . Acbutmn OfNote. The City shall have the right to cause all
indebtedness of the Borrower to the City under this Agreement and the City Note, together with
any accrued interest thereon, to become immediately due and payable. The Borrower waives all
right to presentment, demand, protest or notice of protest or dishonor. The City may proceed to
enforce payment of the indebtedness and to exercise any or all rights afforded to the City as a
creditor and secured party under the law including the Uniform Commercial Code, including
foreclosure under the City Deed of Trust. The Borrower shall be liable to pay the City on
demand all reasonable expenses, costs and fees (including, without limitation, reasonable attorney’s fees and expenses) paid or incurred by the City in connection with the collection of the
Loan and the preservation, maintenance, protection, sale, or other disposition of the security
given for the Loan.
@I SDecificp- . The City shall have the right to mandamus or other
suit, action or proceeding at law or in equity to require Borrower to perform its obligations and
covenants under the Loan Documents or to enjoin acts on things which may be unlawful or in
violation of the provisions of the Loan Documents.
1 (c) sowers Exaense . The City shall have the right (but
not the obligation) to cure any monetary default by Borrower under a loan other than the City
Loan. The Borrower agrees to reimburse the City for any funds advanced by the City to cure a
monetary default by Borrower upon demand therefor, together with interest thereon at the rate of
three percent (3%) per annum from the date of expenditure until the date of reimbursement.
7.3 &glt OfContest . Borrower shall have the right to contest in good faith any claim,
demand, levy, or assessment the assertion of which would constitute an Event of Default
hereunder. Any such contest shall be prosecuted diligently and in a manner unprejudicial to the
City or the rights of the City hereunder.
7.4 es (Xun&&. No right, power, or remedy given to the City by the terms of this Agreement or the Loan Documents is intended to be exclusive of any other right, power,
or remedy; and each and every such right, power, or remedy shall be cumulative and in addition
to every other right, power, or remedy given to the City by the terms of any such instrument, or
by any statute or otherwise against Borrower and any other person. Neither the failure nor any
delay on the part of the City to exercise any such rights and remedies shall operate as a waiver
thereof, nor shall any single or partial exercise by the City of any such right or remedy preclude
any other or further exercise of such right or remedy, or any other right or remedy.
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7.5 . . Waiver of TV . The City Manager may at his or her discretion
waive in writing any of the terms and conditions of this Agreement, without the Borrower
completing an amendment to this Agreement. No waiver of any default or breach by Borrower
hereunder shall be implied from any omission by the City to take action on account of such
default if such default persists or is repeated, and no express waiver shall affect any default other
than the default specified in the waiver, and such waiver shall be operative only for the time and
to the extent therein stated. Waivers of any covenant, term, or condition contained herein shall
not be construed as a waiver of any subsequent breach of the same covenant, term, or condition.
The consent or approval by the City to or of any act by Borrower requiring further consent or
approval shall not be deemed to waive or render unnecessary the consent or approval to or of any
subsequent similar act. The exercise of any right, power, or remedy shall in no event constitute a
cure or a waiver of any default under this Agreement or the Loan Documents, nor shall it
invalidate any act done pursuant to notice of default, or prejudice the City in the exercise of any
right, power, or remedy hereunder or under the Loan Documents.
ARTICLE 8
MISCELLANEOUS
8.1 Time Time is of the essence in this Agreement.
8.2 Force Mz&u~ . Performance by either party hereunder shall not be deemed to be
in default where defaults are due to war; insurrection; strikes; lock-outs; riots; floods;
earthquakes; fires; casualties; acts of God; acts of the public enemy; epidemics; quarantine
restrictions; freight embargoes; governmental restrictions or priority; litigation (including suits
filed by third parties concerning or arising out of this Agreement); weather or soils conditions
which’ in the opinion of the Borrower’s contractor, will necessitate delays; inability to secure
necessary labor, materials or tools; delays of any contractor, sub-contractor or supplier; acts of
the other party; acts or failure to act of any public or governmental agency or entity (other than
the acts or failure to act of the City); or any other causes (other than Borrower’s inability to
obtain financing for the Development) beyond the control or without the fault of the party
claiming an extension of time to perform. Times of performance under this Agreement may also
be extended in writing by the City and the Borrower.
8.3 Notices. All notices, demands and communications between the Borrower and
the City shall be sufficiently given and shall not be deemed given unless dispatched by certified
mail, postage prepaid, return receipt requested, or delivered by express delivery service with a
delivery receipt, to the principal officers of the Borrower and the City as follows:
Borrower: Poinsettia Housing Associates, a California Limited Partnership
c/o BRIDGE Housing Corporation-Southern California
One Hawthorne St., 4th Floor San Francisco, CA 94105
Attn: President
22
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City of Carlsbad Housing and
Redevelopment Department
2965 Roosevelt Drive, Suite B
Carlsbad, CA 92008 Attn: Housing and Redevelopment Director
Such addresses may be changed by notice to the other party given in the same manner as
provided above.
Notice shall be deemed to have been effective on the date shown on the delivery receipt
as the date of delivery, the date delivery was refused, or the date the notice was returned as
undelivered.
8.4’ 1 q . If either party brings a legal or administrative action or
proceeding to enforce, protect or establish any right or remedy hereunder or under any of the
Loan Documents, the prevailing party shall be entitled to recover from the other party its costs of
suit and reasonable attorneys’ fees which shall be fixed by the court.
8.5 . No ‘INdJ!dies Benefited. There are no third party beneficiaries of this
Agreement, and no person or persons other than the Borrower and the City shall have any right
of action hereon.
8.6 a. The City shall have the right to commence, appear in, or defend any
action or proceeding purporting to affect the rights, duties, or liabilities of the parties hereunder,
or the disbursement of any proceeds of the Loan.
8.7 w. Borrower agrees that the City may place signs mutually satisfactory to
Borrower and the City upon the Development at locations selected by Borrower and the City
advising of the financing of the Development by the City. The City may also announce such
placement through press releases to newspapers and trade publications.
8.8 Succ~. The terms hereof shall be binding upon and inure to the
benefit of the successors and assigns of the parties hereto; provided, however, that no assignment of Borrower’s rights hereunder shall be made, voluntarily or by operation of law; without the
prior written consent of the City and that any such assignment without said consent shall be void.
8.9 ctxon of Work. Except where the context otherwise requires, words
imparting the singular number shall include the plural number and vice versa’ words imparting
persons shall include firms, associations, partnerships and corporations, and words of either
gender shall include the other gender.
8.10 v. If any provision of this Agreement shall be declared invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the remaining provisions hereof shall not in any way be affected or impaired.
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.A z ~ . . . . I. -_ .._
.
. 8.11 Govemlng . This Agreement and the Loan Documents and other instruments
given pursuant hereto shall be construed in accordance with and be governed by the laws of the
State of California.
8.12 &JIG&U& This Agreement may not be changed orally, but only by agreement in writing signed by Borrower and City.
8.13 Q@ions and. Captions and headings in this Agreement are for convenience of reference only, and are not to be considered in construing the Agreement.
8.14 Action by the C&y. Except as may be otherwise specifically provided herein,
whenever any approval, notice, direction, consent, request, or other action by the City is required or permitted under this Agreement, such action may be given, made, or taken by the City
Manager, or by any person who shall have been designated in writing to the Borrower by the
City Manager, without further approval by the City Council, and any such action shall be in
writing. The City Manager is also hereby authorized to approve, on behalf of the City, requests
by Borrower for reasonable extensions of time deadlines set forth in this Agreement.
24
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-. - -._ & I
a - r4
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date
and year first above written.
BORROWER:
POINSETTIA HOUSING ASSOCIATES, a
California Limited Partnership
By: BRIDGE Housing Corporation-Southern
California, a California nonprofit public
benefit corporation, its general partner
By:
Its:
CITY:
City of Carlsbad, a municipal corporation
By:
Its:
APPROVED AS TO FORM:
By:
Ron Ball
City Attorney
25
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.
EXKIF3IT A
Legal Description of the Land
1010\05\114674.2
llL?398 A-l
1010\05\114674.2
11/23/98
EXHIBIT B
City Note
B-l
47
h
1010\05\114674.2
11/23/98
EXHIBIT C
City Regulatory Agreement
C-l
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llCW98
EXHIBIT D
City Deed of Trust
D-l
EXHIBIT E
Permitted Uses of Loan Proceeds
1010\0~114674.2
1 l/23/90 E-l
. EXHIBIT F
Form of Certificate of Completion
Recording Requested By And When Recorded Mail To:
City of Carlsbad Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA. 92008
Attn: Housing and Redevelopment Director
No fee for recording pursuant to
Government Code Section 27383
CFmCATE OF COMI’JXTION
Pursuant to Section 4.8 of the City Loan Agreement by and between the City of Carlsbad,
a municipal corporation (the “City”), and BRIDGE Housing Corporation-Southern California Associates, a California Limited Partnership (the “Loan Agreement”), the City certifies that the
Borrower has met its obligations under Article 4 of the Loan Agreement. This Certificate of
Completion shall not constitute evidence of compliance with or satisfaction of any obligation of
the Borrower to any holder of a deed of trust securing money loaned to finance the Development
(as defined in the Loan Agreement) or any part thereof and shall not be deemed either a notice of
completion under the California Civil Code or a certificate of occupancy.
City of Carlsbad, a municipal corporation
By:
[Notarize signature and attach legal description]
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lll23l90 F-l
CITY NOTE
$920,000 ,1998
Carlsbad, California
FOR VALUE RECEIVED, Poinsettia Housing Associates, a California Limited
Partnership (“Borrower”), promises to pay to the City of Carlsbad (“City”), or order, the principal
sum of Nine Hundred Twenty Thousand Dollars ($920,000), or so much thereof as is advanced
to Borrower by the City pursuant to Section 2.6 of the Loan Agreement (defined below), plus
simple interest accruing at the rate of three percent (3%) per annum, commencing upon
disbursement.
1. s. This City Note is made pursuant to a City Loan Agreement
dated as of 1998, by and between the Borrower and the City (the “City Loan
Agreement”), and as con&plated by a Regulatory Agreement executed by the Borrower, the
City, and the Carlsbad Redevelopment Agency, Carlsbad, California (the “City Regulatory
Agreement”).
2. k. The term of this City Note (the “Term”) shall commence on the date of
this City Note and shall end on the earlier of: (i) fifty-five (55) years from the date of issuance of
a certificate of occupancy for all units in the Development (as defined in the City Loan
Agreement); or (ii) June 30,2055.
3. rme of Pam. All amounts due under this City Note shall be
due and payable as set forth in Section 2.3 of the City Loan Agreement.
4. Prep-. Borrower shall have the right to prepay all or a portion of the
principal and interest due under this City Note without any charge or penalty being made
therefor.
Deed of ‘Q&. This City Note is secured by a deed of trust of even date herewith
(the Tf& Deed of Trust).
6. Acceleraticm . Upon the occurrence of a default under the City Loan Agreement,
City Regulatory Agreement or City Deed of Trust, and expiration of all applicable notice and cure periods (an “Event of Default”), the City shall have the right to accelerate the Term of this
City Note and declare all of the unpaid principal and accrued interest immediately due and
payable. Any failure by the City to pursue its legal and equitable remedies upon an Event of Default shall not constitute a waiver of the City’s right to declare an Event of Default and
exercise all of its rights under this City Note, the City Regulatory Agreement, the City Deed of
Trust, and the City Loan Agreement. Nor shall acceptance by the City of any payment provided
1010\05\114572.2
11/23/95 1
for herein constitute a waiver of the City’s right to require prompt payment of any remaining
principal and interest owed.
,
7. No Of&t. Borrower hereby waives any rights of offset it now has or may
hereafter have against the City, its successors and assigns.
8. I Waiver: Attorneys Fees . Borrower and any endorsers or guarantors of this City
Note, for themselves, their heirs, legal representatives, successors and assigns, respectively,
severally waive diligence, presentment, protest, and demand, and notice of protest, dishonor and
non-payment of this City Note, and expressly waive any rights to be released by reason of any
extension of time or change in terms of payment, or change, alteration or release of any security
’ given for the payments hereof, and expressly waive the right to plead any and all statutes of
limitations as a defense to any demand on this City Note or agreement to pay the same, and
jointly and severally agree to pay all costs of collection when incurred, including reasonable attorneys’ fees. If an action is instituted on this City Note, the undersigned promises to pay, in
addition to the costs and disbursements allowed by law, such sum as a court may adjudge
reasonable as attorneys’ fees in such action.
9. Manner Place of Pam. All payments of principal and interest due under
this City Note, as well as any additional payments set forth in the City Deed of Trust, shall be
payable in lawful money of the United States of America at the office of the Housing and
Redevelopment Department, City of Carlsbad, 2965 Roosevelt Drive, Suite B, Carlsbad,
California 92008, or such other address as the City may designate in writing.
10. . . ecourse Om . Except as provided below, neither the Borrower nor, if
the Borrower is a partnership, any partner of the Borrower shall have any direct or indirect
personal liability for payment of the principal of, or interest on, this City Note, the City Loan
Agreement, or the City Regulatory Agreement or the performance of the covenants of the
Borrower under the City Deed of Trust. The sole recourse of the City with respect to the
principal of, or interest on, the City Note and defaults by Borrower in the performance of its
covenants under the City Loan Agreement, City Regulatory Agreement, and City Deed of Trust
shall be to the property described in the City Deed of Trust; provided, however, that nothing
contained in the foregoing limitation of liability shall (a) limit or impair the enforcement against
all such security for the City Note of all the rights and remedies of the City thereof, or (b) be
deemed in any way to impair the right of the City thereof to assert the unpaid principal amount
of the Note as demand for money within the meaning and intendment of Section 43 1.70 of the California Code of Civil Procedure or any successor provision thereto. The foregoing limitation
of liability is intended to apply only to the obligation for the repayment of the principal of, and
payment of interest on the Note and the performance of Trustor’s obligations under the City
Regulatory Agreement and the City Deed of Trust, except as hereafter set forth; nothing
contained therein is intended to relieve the Borrower of its obligation to indemnify the City
under Section 6.11 and 6.12(c) of the City Loan Agreement, or liability for (i) fraud or willful
misrepresentation; (ii) the failure to pay taxes, assessments or other charges which may create
liens on the Property that are payable or applicable prior to any foreclosure under the City Deed
of Trust (to the full extent of such taxes, assessments or other charges); (iii) the fair market value
of any personal property or fixtures removed or disposed of by Borrower other than in
1010\0t3114672.2
11/23/98 2
r
.
. .
accordance with the City Deed of Trust; and (iv) the misappropriation of any proceeds under any insurance policies or awards resulting from condemnation or the exercise of the power of
eminent domain or by reason of damage, loss or destruction to any portion of the Property.
POINSETTIA HOUSING ASSOCIATES, a California
Limited Partnership
By: BRIDGE Housing’Corporation-Southern California, a
California nonprofit public benefit corporation, its general
partner
1010\05\114672.2
lll23l98 3
CITY DEED OF TRUST
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Carlsbad
2965 Roosevelt Drive, Suite B
Carlsbad, CA 92008 Attention: Housing and Redevelopment Director
No fee for recording pursuant to
Government Code Section 27383
TY AGW
THIS CITY DEED OF TRUST AND SECURITY AGREEMENT (“Deed of Trust”) is
made as of this _ day of - 1998, by and among Poinsettia Housing Associates, a
California Limited Partnership, (“Trustor”), Chicago Title Company, a California corporation
(“Trustee”), and the City of Carlsbad, a municipal corporation (“Beneficiary”).
FOR GOOD AND VALUABLE CONSIDERATION, including the indebtedness herein
recited and the trust herein created, the receipt of which is hereby acknowledged, Trustor hereby
irrevocably grants, transfers, conveys and assigns to Trustee, IN TRUST, WITH POWER OF
SALE, for the benefit and security of Beneficiary, under and subject to the terms and conditions
hereinafter set forth, Trustor’s leasehold interest in the property located in the County of San Diego, State of California, that is described in the attached J&&bit A, incorporated herein by this
reference (the “Property”).
TOGETHER WITH all interest, estates or other claims, both in law and in equity which
Trustor now has or may hereafter acquire in the Property and the rents;
TOGETHER WITH Trustor’s interest in all easements, rights-of-way and rights used in
connection therewith or as a means of access thereto, including (without limiting the generality
of the foregoing) all tenements, hereditaments and appurtenances thereof and thereto;
TOGETHER WITH Trustor’s interest in any and all buildings and improvements of every
kind and description now or hereafter erected thereon, and all property of the Trustor now or
hereafter affixed to or placed upon the Property;
TOGETHER WITH Trustor’s interest in all building materials and equipment now or
hereafter delivered to said property and intended to be installed therein;
1010\05\114749.2
llJ23l98
TOGETHER WITH all right, title and interest of Trustor, now owned or hereafter
acquired, in and to any land lying within the right-of-way of any street, open or proposed,
adjoining the Property, and any and all sidewalks, alleys and strips and areas of land adjacent to
or used in connection with the Property;
TOGETHER WITH Trustor’s estate, interest, right, title, other claim or demand, of every
nature, in and to such property, including the Property, both in law and in equity, including, but
not limited to, all deposits made with or other security given by Trustor to utility companies, the
proceeds from any or all of such property, including the Property, claims or demands with respect to the proceeds of insurance in effect with respect thereto, which Trustor now has or may
hereafter acquire, any and all awards made for the taking by eminent domain or purchase in lieu
thereof of the whole or any part of such property, including without limitation, any awards
resulting from a change of grade of streets and awards for severance damages to the extent
Beneficiary has an interest in such awards for taking as provided in Paragraph 4.1 herein; and
TOGETHER WITH all of Trustor’s interest in all articles of personal property or fixtures
now or hereafter attached to or used in and about the building or buildings now erected or
hereafter to be erected on the Property which are necessary to the complete and comfortable use
and occupancy of such building or buildings for the purposes for which they were or are to be
erected, and all renewals or replacements thereof or articles in substitution therefor, whether or
not the same are, or shall be attached to said building or buildings in any manner.
All of the foregoing, together with the Property, is herein referred to as the “Security.”
To have and to hold the Security together with acquittances to the Trustee, its successors and
assigns forever.
FOR THE PURPOSE OF SECURING:
(a) Payment of just indebtedness of Trustor to Beneficiary as set forth in the Note and
the Loan Agreement (both as defined in Article 1 below) until paid or cancelled. Said principal
and other payments shall be due and payable as provided in the Note and the Loan Agreement.
The Note, the Loan Agreement, and the Regulatory Agreement (defined below), and all their
terms are incorporated herein by reference, and this conveyance shall secure any and all
extensions thereof, however evidenced; and
(b) Payment of any sums advanced by Beneficiary to protect the Security pursuant to
the terms and provisions of this Deed of Trust following a breach of Trustor’s obligation to
advance said sums and the expiration of any applicable cure period, with interest thereon as
provided herein; and
w Performance of every obligation, covenant or agreement of Trustor contained
herein and in the Loan Documents (defined in Section 1.2 below).
AND TO PROTECT THE SECURITY OF THIS DEED OF TRUST, TRUSTOR
COVENANTS AND AGREES:
1010\0n114749.2
llmi98 2
A
ARTICLE 1 DEFINITIONS
In addition to the terms defined elsewhere in this Deed of Trust, the following terms shall
have the following meanings in this Deed of Trust:
Section 1.1 The term “Loan Agreement” means that certain City Loan Agreement
between Trustor and Beneficiary dated as of 1998, providing for the Beneficiary to
loan to the Trustor Nine Hundred Twenty Thousand D%rs ($920,000) for the development on
the Property of improvements.
Section 1.2 The term “Loan Documents” means this Deed of Trust, the Note, the Loan
Agreement, and the Regulatory Agreement.
Section 1.3 The term “Note” means the City Note in the principal amount of Nine
Hundred Twenty Thousand Dollars ($920,000) dated -, 1998, executed by the Trustor
in favor of the Beneficiary, the payment of which is secured by this Deed of Trust. (A copy of
the Note is on file with the Beneficiary and terms and provisions of the Note are incorporated
herein by reference.)
Section 1.4 The term “Principal” means the aggregate of the amounts required to be
paid under the Note.
Section 1.5 The term “Regulatory Agreement” means the Regulatory Agreement by
and between the Trustor and the Beneficiary of even date herewith.
ARTICLE 2 MAINTENANCE AND MODIFICATION OF THE
PROPERTY AND SECURITY
Section 2.1 Maintenance and Modification of the Property by Trustor.
The Trustor agrees that at all times prior to full payment of the sum owed under the Note,
the Trustor will, at the Trustor’s own expense, maintain, preserve and keep the Security or cause
the Security to be maintained and preserved in good condition, subject to Article 4 below. The .Trustor will from time to time make or cause to be made all repairs, replacements and renewals
deemed proper and necessary by it. The Beneficiary shall have no responsibility in any of these
matters or for the making of improvements or additions to the Security.
Trustor agrees to pay filly and discharge (or cause to be paid fully and discharged) all
claims for labor done and for material and services furnished in connection with the Security,
diligently to file or procure the filing of a valid notice of cessation upon the event of a cessation
of labor on the work or construction on the Security for a continuous period of thirty (30) days or
more, and to take all other reasonable steps to forestall the assertion of claims of lien against the
Security of any part thereof. Trustor irrevocably appoints, designates and authorizes Beneficiary
as its agent (said agency being coupled with an interest) with the authority, but without any obligation, to file for record any notices of completion or cessation of labor or any other notice
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. - h
that Beneficiary deems necessary or desirable to protect its interest in and to the Security or the
Loan Documents; provided, however, that Beneficiary shall exercise its rights as agent of Trustor
only in the event that Trustor shall fail to take, or shall fail to diligently continue to take, those
actions as hereinbefore provided, after notice and expiration of all applicable cure periods.
Notwithstanding anything to the contrary contained in this Deed of Trust, Trustor shall
not be obligated to pay any claims for labor, materials or services which Trustor in good faith
disputes and is diligently contesting provided that Trustor shall, at Beneficiary’s written request,
within thirty (30) days after the filing of any claim of lien, record in the Office of the Recorder of
San Diego County, a surety bond in an amount 1 and l/2 times the amount of such claim item to
protect against a claim of lien, or provide such other security reasonably satisfactory to
Beneficiary.
Section 2.2 Granting of Easements.
Trustor may not grant easements, licenses, rights-of-way or other rights or privileges in
the nature of easements with respect to any property or rights included in the Security except
those required or desirable for installation and maintenance of public utilities including, without
limitation, water, gas, electricity, sewer, telephone and telegraph, or those required by law. As to
these exceptions, Beneficiary will grant and/or direct the Trustee to grant such easements.
ARTICLE 3 MAINTENANCE AND MODIFICATION OF THE
PROPERTY AND SECURITY
Section 3.1 Taxes, Other Governmental Charges and Utility Charges.
Trustor shall pay, or cause to be paid, prior to delinquency, all taxes, assessments,
charges and levies imposed by any public authority or utility company which are or may become
a lien affecting the Security or any part thereof; provided, however, if such taxes, assessments or
charges may be paid in installments, Trustor may pay in such installments; and provided further,
that Trustor shall not be required to pay and discharge any such tax, assessment, charge or levy so long as Trustor is contesting the legality thereof in good faith and by appropriate proceedings
and Trustor has adequate funds to pay any liabilities contested pursuant to this Section 3.1. The
provisions of this Section 3.1 shall not be construed to require that Trustor maintain a reserve
account, escrow account, impound account or other similar account for the payment of future
taxes, assessments, charges and levies.
In the event that Trustor shall fail to pay any of the foregoing items required by this Section to be paid by Trustor, Beneficiary may (but shall be under no obligation to) pay the
same, after the Beneficiary has notified the Trustor in writing of such failure to pay and the
Trustor fails to fully pay such items within seven (7) business days after receipt of such notice or,
alternatively, provides Beneficiary with evidence Trustor is contesting such items in accordance
with this Section. Any amount so advanced therefor by Beneficiary, together with interest
thereon from the date of such advance at the maximum rate permitted by law, shall become an
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additional obligation of Trustor to the Beneficiary and shall be secured hereby, and Trustor
agrees to pay all such amounts.
Section 3.2 Provisions Respecting Insurance.
Trustor agrees to provide insurance conforming in all respects to that required under the
Loan Documents during the course of construction and following completion, and at all times
until all amounts secured by this Deed of Trust have been paid and all other obligations secured
hereunder fulfilled, and this Deed of Trust reconveyed.
All such insurance policies and coverages shall be maintained at Trustor’s sole cost and
expense. Certificates of insurance for all of the above insurance policies, showing the same to be
in full force and effect, shall be delivered to the Beneficiary upon demand therefor at any time
prior to the Beneficiary’s receipt of the entire Principal and all amounts secured by this Deed of
Trust.
Section 3.3 Advances.
In the event the Trustor shall fail to maintain the full insurance coverage required by this
Deed of Trust, the Beneficiary, after at least seven (7) days prior written notice to Trustor, may (but shall be under no obligation to) take out the required policies of insurance and pay the
premiums on the same; and all amounts so advanced therefor by the Beneficiary shall become an
additional obligation of the Trustor to the Beneficiary (together with interest as set forth below)
and shall be secured hereby, which amounts the Trustor agrees to pay on the demand of the
Beneficiary, and if not so paid, shall bear interest from the date of the advance at the rate of six
percent (6%) per annum.
ARTICLE 4 DAMAGE, DESTRUCTION OR
CONDEMNATION
Section 4.1 Awards and Damages.
All judgments, awards of damages, settlements and compensation made in connection with or in lieu of (1) taking of all or any part of or any interest in the Property by or under
assertion of the power of eminent domain, (2) any damage to or destruction of the Property or
any part thereof by insured casualty, and (3) any other injury or damage to all or any part of the
Property (“Funds”) are hereby assigned to and shall be paid to, subject to the requirements of
lienholders senior to Beneficiary, the Beneficiary by a check made payable to the Beneficiary.
Upon the occurrence of an Event of Default (as defined in the Loan Agreement), the Beneficiary
shall be entitled to settle and adjust all claims under insurance policies provided under this Deed of Trust and may deduct and retain from the proceeds of such insurance the amount of all
expenses incurred by it in connection with any such settlement or adjustment. All fire and standard risk or extended coverage (casualty) insurance proceeds shall be applied to the payment
of the costs of repairing or rebuilding that part of the improvements on the Property damaged or destroyed if(i) the Trustor agrees in writing within ninety (90) days after payment of the
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proceeds of insurance that such repair or rebuilding is economically feasible, and (ii) each lender
in connection with outstanding Construction and Permanent Financing (as defined in the Loan
Agreement) permits such repairing or rebuilding, provided that ‘the extent of Trustor’s obligation
to restore the improvements shall be limited to the amount of the insurance proceeds. If the
improvements are not repaired or rebuilt as provided in this Section 4.1, all such proceeds shall
be applied to repayment of outstanding loans including the loan secured by this Deed of Trust, in
the order of lien priority. Application of all or any part of the Funds collected and received by
the Beneficiary or the release thereof shall not cure or waive any default under this Deed of
Trust. The rights of the Beneficiary under this Section 4.1 are subject to the rights of any senior
mortgage lender.
ARTICLE 5 AGREEMENTS AFFECTING THE PROPERTY;
FURTHER ASSURANCES; PAYMENT OF PRINCIPAL
AND INTEREST
Section 5.1 Other Agreements Affecting Property.
The Trustor shall duly and punctually perform all terms, covenants, conditions and
agreements binding upon it under the Loan Documents and any other agreement of any nature
whatsoever now or hereafter involving or affecting the Security or any part thereof.
Section 5.2 Agreement to Pay Attorneys’ Fees and Expenses.
In the event of any Event of Default (as defined below) hereunder, and if the Beneficiary
should employ attorneys or incur other expenses for the collection of amounts due or the
enforcement of performance or observance of an obligation or agreement on the part of the
Trustor in this Deed of Trust, the Trustor agrees that it will, on demand therefor, pay to the
Beneficiary the reasonable fees of such attorneys and such other reasonable expenses so incurred by the Beneficiary; and any such amounts paid by the Beneficiary shall be added to the
indebtedness secured by the lien of this Deed of Trust, and shall bear interest from the date such
expenses are incurred at the lesser of ten percent (1 O”/o) per annum or the maximum amount
permitted by law.
Section 5.3 Payment of the Principal.
The Trustor shall pay to the Beneficiary the Principal and any other payments as set forth
in the Note in the amounts and at the times set out therein.
Section 5.4 Personal Property.
To the maximum extent permitted by law, the personal property subject to this Deed of Trust shall be deemed to be fixtures and part of the real property and this Deed of Trust shall
constitute a fixtures filing under the California Commercial Code. As to any personal property
not deemed or permitted to be fixtures, this Deed of Trust shall constitute a security agreement
under the California Commercial Code.
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Section 5.5 Financing Statement.
The Trustor shall execute and deliver to the Beneficiary such financing statements
pursuant to the appropriate statutes, and any other documents or instruments as are reasonably
required to convey to the Beneficiary a valid perfected security interest in the Security. The
Trustor agrees to perform all acts which the Beneficiary may reasonably request so as to enable
the Beneficiary to maintain such valid perfected security interest in the Security in order to
secure the payment of the Note in accordance with its terms. The Beneficiary is authorized to
file a copy of any such financing statement in any jurisdiction(s) as it shall deem appropriate from time to time in order to protect the security interest established pursuant to this instrument.
Section 5.6 Operation of the Security.
The Trustor shall operate the Security (and, in case of a transfer of a portion of the
Security subject to this Deed of Trust, the transferee shall operate such portion of the Security) in
full compliance with the Loan Documents.
Section 5.7 Inspection of the Security.
At any and all reasonable times upon seventy-two (72) hours prior written notice, subject
to the rights of tenants, the Beneficiary and its duly authorized agents, attorneys, experts,
engineers, accountants and representatives shall have the right, without payment of charges or
fees, to inspect the Security.
Section 5.8 Nondiscrimination.
The Trustor herein covenants by and for itself, its heirs, executors, administrators, and
assigns, and all persons claiming under or through them, that there shall be no discrimination
against or segregation of, any person or group of persons on account of race, color, creed,
religion, age, disability, sex, sexual orientation, marital status, national origin or ancestry in the
sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Security, nor shall the
Trustor itself or any person claiming under or through it establish or permit any such practice or
practices of discrimination or segregation with reference to the selection, location, number, use
or occupancy of tenants, lessees, subtenants, sublessees or vendees in the Security. The
foregoing covenants shall run with the land.
ARTICLE 6 EVENTS OF DEFAULT AND REMEDIES
Section 6.1 Acceleration of Maturity.
If an Event of Default, (as defined in the Loan Agreement), shall have occurred and be
continuing, then at the option of the Beneficiary, the amount of any payment related to the Event
of Default and the unpaid Principal of the Note shall immediately become due and payable, upon
written notice by the Beneficiary to the Trustor (or automatically where so specified in the Loan
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Documents), and no omission on the part of the Beneficiary to exercise such option when
entitled to do so shall be construed as a waiver of such right.
Section 6.2 The Beneficiary’s Right to Enter and Take Possession.
If an Event of Default shall have occurred and be continuing, the Beneficiary may:
(a) Either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court, and without regard to the adequacy of its
security, enter upon the Security and take possession thereof (or any part thereof), in its own
name or in the name of Trustee, and do any acts which it deems necessary or desirable to
preserve the value or marketability of the Property, or part thereof or interest therein, increase the
income therefrom or protect the security thereof. The entering upon and taking possession of the
Security shall not cure or waive any Event of Default or Notice of Default (as defined below) hereunder or invalidate any act done in response to such Event of Default or pursuant to such
Notice of Default and, notwithstanding the continuance in possession of the Security,
Beneficiary shall be entitled to exercise every right provided for in this Deed of Trust, or by law
upon occurrence of any Event of Default, including the right to exercise the power of sale;
0-9 Commence an action to foreclose this Deed of Trust as a mortgage,
appoint a receiver, or specifically enforce any of the covenants hereof;
(4 Deliver to Trustee a written declaration of default and demand for sale,
and a written notice of default and election to cause Trustor’s interest in the Security to be sold
(“Notice of Default and Election to Sell”), which notice Trustee or Beneficiary shall cause to be
duly filed for record in the Official Records of San Diego County; or
69 Exercise all other rights and remedies provided herein, or in any other
document or agreement now or hereafter evidencing, creating or securing all or any portion of
the obligations secured hereby, or provided by law.
Section 6.3 Foreclosure By Power of Sale.
Should the Beneficiary elect to foreclose by exercise of the power of sale herein
contained following an Event of Default, the Beneficiary shall give notice to the Trustee (the
“Notice of Sale”) and shall deposit with Trustee this Deed of Trust which is secured hereby (and
the deposit of which shall be deemed to constitute evidence that the unpaid principal amount of
the Note is immediately due and payable), and such receipts and evidence of any expenditures
made that are additionally secured hereby as Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, Trustee shall cause to be
recorded, published and delivered to Trustor such Notice of Default and Election to Sell as then
required by law and by this Deed of Trust. Trustee shall, without demand on Trustor, after lapse
of such time as may then be required by law and after recordation of such Notice of Default and Election to Sell and after Notice of Sale having been given as required by law, sell the Security,
at the time and place of sale fixed by it in said Notice of Sale, whether as a whole or in separate
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. -
. lots or parcels or items as Trustee shall deem expedient and in such order as it may determine
unless specified otherwise by the Trustor according to California Civil Code Section 2924g(b), at
public auction to the highest bidder, for cash in lawful money of the United States payable at the
time of sale. Trustee shall deliver to such purchaser or purchasers thereof its good and sufficient
deed or deeds conveying the property so sold, but without any covenant or warranty, express or
implied. The recitals in such deed or any matters of facts shall be conclusive proof of the
truthfulness thereof Any person, including, without limitation, Trustor, Trustee or Beneficiary,
may purchase at such sale, and Trustor hereby covenants to warrant and defend the title of such
purchaser or purchasers.
(b) After deducting all reasonable costs, fees and expenses of Trustee,
including costs of evidence of title in connection with such sale, Trustee shall apply the proceeds
of sale to payment of: (i) the unpaid Principal amount of the Note; (ii) all other amounts owed to
Beneficiary under the Loan Documents; (iii) all other sums then secured hereby; and (iv) the
remainder, if any, to Trustor.
(cl Trustee may postpone sale of all or any portion of the Property by public
announcement at such time and place of sale, and from time to time thereafter, and without
further notice make such sale at the time fixed by the last postponement, or may, in its discretion,
give a new Notice of Sale.
Section 6.4 Receiver.
If an Event of Default shall have occurred and be continuing, Beneficiary, as a matter of
right and without further notice to Trustor or anyone claiming under the Security, and without
regard to the then value of the Security or the interest of Trustor therein, shall have the right to
apply to any court having jurisdiction to appoint a receiver or receivers of the Security (or a part
thereof), and Trustor hereby irrevocably consents to such appointment and waives further notice
of any application therefor. Any such receiver or receivers shall have all the usual powers and
duties of receivers in like or similar cases, and all the powers and duties of Beneficiary in case of
entry as provided herein, and shall continue as such and exercise all such powers until the date of
confirmation of sale of the Security, unless such receivership is sooner terminated.
Section 6.5 Remedies Cumulative.
No right, power or remedy conferred upon or reserved to the Beneficiary by this Deed of
Trust is intended to be exclusive of any other right, power or remedy, but each and every such
right, power and remedy shall be cumulative and concurrent and shall be in addition to any other
right, power and remedy given hereunder or now or hereafter existing at law or in equity.
Section 6.6 No Waiver,
69 No delay or omission of the Beneficiary to exercise any right, power or remedy accruing upon any Event of Default shall exhaust or impair any such right, power or
remedy, or shall be construed to be a waiver of any such Event of Default or acquiescence
therein; and every right, power and remedy given by this Deed of Trust to the Beneficiary may
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. be exercised from time to time and as often as may be deemed expeditious by the Beneficiary.
No consent or waiver, expressed or implied, by the Beneficiary to any breach by the Trustor in
the performance of the obligations hereunder shall be deemed or construed to be a consent to or
waiver of obligations of the Trustor hereunder. Failure on the part of the Beneficiary to complain of any act or failure to act or to declare an Event of Default, irrespective of how long
such failure continues, shall not constitute a waiver by the Beneficiary of its right hereunder or
impair any rights, power or remedies consequent on any Event of Default by the Trustor.
00 If the Beneficiary (i) grants forbearance or an extension of time for the
payment of any sums secured hereby, (ii) takes other or additional security or the payment of any
sums secured hereby, (iii) waives or does not exercise any right granted in the Loan Documents,
(iv) releases any part of the Security from the lien of this Deed of Trust, or otherwise changes
any of the terms, covenants, conditions or agreements in the Loan Documents, (v) consents to the
granting of any easement or other right affecting the Security, or (iv) makes or consents to any
agreement subordinating the lien hereof, any such act or omission shall not release, discharge,
modify, change or affect the obligations under this Deed of Trust, or any other obligation of the
Trustor or any subsequent purchaser of the Security or any part thereof, or any maker, co-signer,
endorser, surety or guarantor (unless expressly released); nor shall any such act or omission
preclude the Beneficiary from exercising any right, power or privilege herein granted or intended
to be granted in any Event of Default then made or of any subsequent Event of Default, nor,
except as otherwise expressly provided in an instrument or instruments executed by the
Beneficiary shall the lien of this Deed of Trust be altered thereby.
Section 6.7 Suits to Protect the Security.
The Beneficiary shall have power to (a) institute and maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Security and the rights of the Beneficiary as may be unlawful or any violation of this Deed of Trust, (b) preserve or protect its
interest (as described in this Deed of Trust) in the Security, and (c) restrain the enforcement of or
compliance with any legislation or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement for compliance with such enactment,
rule or order would impair the Security thereunder or be prejudicial to the interest of the
Beneficiary.
Section 6.8 Trustee May File Proofs of Claim.
In the case of any receivership, insolvency, bankruptcy, reorganization, arrangement,
adjustment, composition or other proceedings affecting the Trustor, its creditors or its property,
the Beneficiary, to the extent permitted by law, shall be entitled to file such proofs of claim and
other documents as may be necessary or advisable in order to have the claims of the Beneficiary
allowed in such proceedings and for any additional amount which may become due and payable by the Trustor hereunder after such date.
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Section 6.9 Waiver.
The Trustor waives presentment, demand for payment, notice of dishonor, notice of
protest and nonpayment, protest, notice of interest on interest and late charges, and diligence in
taking any action to collect any sums owing under the Note or in proceedings against the
Security, in connection with the delivery, acceptance, performance, default, endorsement or
guaranty of this Deed of Trust.
ARTICLE 7 MISCELLANEOUS
Section 7.1 Amendments.
This instrument cannot be waived, changed, discharged or terminated orally, but only by
an instrument in writing signed by Beneficiary and Trustor.
Section 7.2 Reconveyance by Trustee.
Upon written request of Beneficiary stating that all sums secured hereby have been paid
or forgiven, and upon surrender of this Deed of Trust to Trustee for cancellation and retention,
and upon payment by Trustor of Trustee’s reasonable fees, Trustee shall reconvey the Security to
Trustor, or to the person or persons legally entitled thereto.
Section 7.3 Notices.
If at any time after the execution of this Deed of Trust it shall become necessary or
convenient for one of the parties hereto to serve any notice, demand or communication upon the
other party, such notice, demand or communication shall be in writing and shall be served
personally or by depositing the same in the registered United States mail, return receipt
requested, postage prepaid and (1) if intended for Beneficiary shall be addressed to:
City of Carlsbad
2965 Roosevelt Drive, Suite B
Carlsbad, CA 92008
Attention: Housing and Redevelopment Director
and (2) if intended for Trustor shall be addressed to:
Poinsettia Housing Associates, a California
Limited Partnership
c/o BRIDGE Housing Corporation-Southern California
One Hawthorne St., Suite 400
San Francisco, CA 94105 Attn: President
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lll23l98 11
. Any notice, demand or communication shall be deemed given, received, made or communicated
on the date personal delivery is effected or, if mailed in the manner herein specified, on the
delivery date or date delivery is refused by the addressee, as shown on the return receipt. Either
party may change its address at any time by giving written notice of such change to Beneficiary
or Trustor as the case may be, in the manner provided herein, at least ten (10) days prior to the
date such change is desired to be effective.
Section 7.4 Captions.
The captions or headings at the beginning of each Section hereof are for the convenience
of the parties and are not a part of this Deed of Trust.
. Section 7.5 Invalidity of Certain Provisions.
Every provision of this Deed of Trust is intended to be severable. In the event any term
or provision hereof is declared to be illegal or invalid for any reason whatsoever by a court or
other body of competent jurisdiction, such illegality or invalidity shall not affect the balance of
the terms and provisions hereof, which terms and provisions shall remain binding and
enforceable. If the lien of this Deed of Trust is invalid or unenforceable as to any part of the
debt, or if the lien is invalid or unenforceable as to any part of the Security, the unsecured or
partially secured portion of the debt, and all payments made on the debt, whether voluntary or
under foreclosure or other enforcement action or procedure, shall be considered to have been
first paid or applied to the full payment of that portion of the debt which is not secured or
partially secured by the lien of this Deed of Trust.
Section 7.6 Governing Law.
This Deed of Trust shall be governed by and construed in accordance with the laws of the
State of California.
Section 7.7 Gender and Number.
In this Deed of Trust the singular shall include the plural and the masculine shall include
the feminine and neuter and vice versa, if the context so requires.
Section 7.8 Deed of Trust, Mortgage.
Any reference in this Deed of Trust to a mortgage shall also refer to a deed of trust and
any reference to a deed of trust shall also refer to a mortgage.
Section 7.9 Actions.
Trustor agrees to appear in and defend any action or proceeding purporting to affect the
Security.
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lll23iQ8 12 66
.
. Section 7.10 Substitution of Trustee.
C
Beneficiary may from time to time substitute a successor or successors to any Trustee
named herein or acting hereunder to execute this Trust. Upon such appointment, and without
conveyance to the successor trustee, the latter shall be vested with all title, powers, and duties
conferred upon any Trustee herein named or acting hereunder. Each such appointment and
substitution shall be made by written instrument executed by Beneficiary, containing reference to
this Deed of Trust and its place of record, which, when duly recorded in the proper office of the
county or counties in which the Property is situated, shall be conclusive proof of proper
appointment of the successor trustee.
,
Section 7.11 Statute of Limitations,
The pleading of any statute of limitations as a defense to any and all obligations secured
by this Deed of Trust is hereby waived to the full extent permissible by law.
Section 7.12 Acceptance by Trustee.
Trustee accepts this Trust when this Deed of Trust, duly executed and acknowledged, is
made public record as provided by law. Except as otherwise provided by law the Trustee is not
obligated to notify any party hereto of pending sale under this Deed of Trust or of any action of
proceeding in which Trustor, Beneficiary, or Trustee shall be a party unless brought by Trustee.
IN WITNESS WHEREOF, Trustor has executed this Deed of Trust as of the day and
year first above written.
TRUSTOR:
POINSETTIA HOUSING ASSOCIATES, a
California Limited Partnership
By: BRIDGE Housing Corporation-Southern
California, a California nonprofit public benefit
corporation, its general partner
By:
Its:
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11123l98 13
STATE OF CALIFORNIA )
1 ss
COUNTY OF )
on , 199-, before me, the undersigned, a Notary Public, personally appeared
, personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument, and acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or
the entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
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lll23lQ8
II
.
EXHIBIT A
(Legal Description of Property)
The land is situated in the State of California, County of San Diego, and is described as follows:
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llLWQ8 A-l
.
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
City of Carlsbad
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008
Attn: Housing and Redevelopment Director
REGULATORY AGREEMENT AND
DECLARATION OF RESTRICTIVE COVENANTS
This Regulatory Agreement and Declaration of Restrictive Covenants (the “Agreement”)
is made and entered into as of this day of 1998, by and between the City of
Carlsbad, a municipal corporation (the “City”), Carlsbad Redevelopment Agency, Carlsbad, California’ a public body corporate and politic (the “Agency”) and Poinsettia Housing
Associates, a California Limited Partnership (“Owner”).
1. The City has entered into the Loan Agreement with Owner under which the City
will loan funds (the “Loan”) to Owner which will be used, together with funds obtained from
other sources, for the development and construction of ninety-two (92) residential units known as
(the “Development”), located on the real property in the City of
Carlsbad, County of San Diego, more particularly described in Exhibit A attached hereto and
incorporated herein (the “Property”).
2. The funds loaned to Owner pursuant to the Loan Agreement are City Housing
Trust Fund monies.
3. The City and the Agency intend to utilize the Development to obtain affordable
housing production credits for the Agency pursuant to Health and Safety Code Section
3341300(2)(A)(“) n as newly constructed housing units located outside of the Carlsbad Village
Redevelopment Project Area and available at affordable housing cost to low and moderate
income households. Such units are required to remain affordable to such households for not less
than the period of the land use controls established in the Redevelopment Plan for the Carlsbad
Village Redevelopment Project Area. This Agreement is also intended to implement this
requirement.
4. The City has agreed to loan funds to Owner on the condition that the
Development be maintained and operated in accordance with Health and Safety Section
33413(b) and in accordance with additional restrictions concerning affordability, operation, and
maintenance of the Development, as specified in this Agreement.
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11l23lQ8 1
5. In consideration of receipt of the Loan at an interest rate substantially below the
market rate, Owner has further agreed to observe all the terms and conditions set forthbelow.
6. In order to ensure that the entire Development will be used and operated in
accordance with these conditions and restrictions, the City, the Agency and Owner wish to enter
into this Agreement.
THEREFORE, the City, the Agency and Owner hereby agree as follows:
ARTICLE 1
DEFINITIONS
1.1
When used in this Agreement, the following terms shall have the respective meanings
assigned to them in this Article 1.
(9 “Adjusted Income” shall mean the total anticipated annual income of all
persons in a household, as calculated in accordance with 25 California Code of Regulations
Section 6914 or pursuant to a successor State housing program that utilizes a reasonably similar
method of calculation of adjusted income. In the event that no such program exists, the City
shall provide the Owner with a reasonably similar method of calculation of adjusted income as
provided in said Section 6914.
03 “Agency” shall mean the Carlsbad Redevelopment Agency, Carlsbad,
California, a public body, corporate and politic.
Cc) “Agreement“ shall mean this Regulatory Agreement and Declaration of
Restrictive Covenants.
(4 “City” shall mean the City of Carlsbad, a municipal corporation.
(e) “Deed of Trust” shall mean the deed of trust to the City on the Property
which secures repayment of the Loan and performance of this Agreement.
(0 “Development” shall mean the Property and the ninety-two (92) units to be constructed on the Property, as well as all landscaping, roads and parking spaces existing
thereon, as the same may from time to time exist.
63) “HCD” shall mean the California Department of Housing and Community
Development.
09 “Loan” shall mean all funds loaned to Owner pursuant to the Loan
Agreement.
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lli23tQ8 2
(0 “Loan Agreement” shall mean the City Loan Agreement entered into by
and between the City and Owner and dated of even date herewith.
(i) “Lower Income Household” shall mean a household with an Adjusted
Income that does not exceed one hundred twenty percent (120%) of the qualifying limits for very
low income households as established and amended from time to time pursuant to Section 8 of
the United States Housing Act of 1937, and as published by HCD.
00 “Lower Income Units” shall mean the Units which, pursuant to Section 2.2
below, are required to be occupied by Lower Income Households.
(1) “Median Income” shall mean the median gross yearly income adjusted for
actual household size, in the County of San Diego, California’ as published from time to time by
HCD. In the event that such income determinations are no longer published, or are not updated
for a period of at least eighteen (18) months, the City shall provide the Owner with other income
determinations which are reasonably similar with respect to methods of calculation to those
previously published by HCD.
m “Moderate Income Household” shall mean a household whose annual
gross income does not exceed one hundred and twenty percent (120%) of Median Income,
adjusted for household size.
(n) “Moderate Income Units” shall mean the Units limited to occupancy by
Moderate Income Households pursuant to Section 2.1 below.
(4 “Note” shall mean the promissory note from the Owner to the City
evidencing all or any part of the Loan.
o>) “Owner” shall mean Poinsettia Housing Associates, a California Limited
Partnership and its successors and assigns to the Development.
(s) “Property” shall mean the real property described in Exhibit A attached
hereto and incorporated herein.
(r) “Rent” shall mean the total of monthly payments by the tenants of a Unit
for the following: use and occupancy of the Unit and land and associated facilities, including
parking; any separately charged fees or service charges assessed by Owner which are required of all tenants, other than security deposits; an allowance for the cost of an adequate level of service
for utilities paid by the tenant, including garbage collection, sewer, water, electricity, gas and
other heating, cooking and refrigeration fuel, but not telephone service; any other interest, taxes,
fees or charges for use of the land or associated facilities and assessed by a public or private
entity other than Owner, and paid by the tenant.
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llK23l98 3
(s) “Term” shall mean the period of time beginning on the date of recordation
of this Agreement and ending fifty-five (55) years after a Certificate of Occupancy is issued by
the City for all Units.
0) “Units” shall mean the nine-two (92) rental units to be constructed on the
Property by the Owner, but excluding therefrom one (1) resident manager’s unit.
ARTICLE2 .
AFFORDABILITY COVENANTS
2.1
GO Forty-five (45) of the Units shall be rented and occupied by or, if vacant,
available for rental and occupancy by Lower Income Households. The remainder of the Units
shall be occupied by Moderate Income Households.
2.2 Allowable I@&
00 Subject to Section 2.3 below, the Rent charged the occupants of the Lower
Income Units shall not exceed one-twelfth of thirty percent (30%) of sixty percent (60%) of Median Income, adjusted for household size. The Rent charged the occupants of the Moderate
Income Units shall not exceed one-twelfth of thirty percent (30%) of one hundred ten percent
(110%) of Median Income, adjusted for household size.
09 Subject to Section 2.3(b) below, in calculating the allowable Rent for the
Lower Income Units and the Moderate Income Units, the following assumed household sizes
shall be utilized:
Number of Bedrooms Assumed Household Size
Studio
One
Two Three
Four
2.3 eased Income of Occun~ .
09 In the event, upon recertification of an occupant household’s income, the
Owner discovers that a Lower Income Household no longer qualifies as a Lower Income
Household (but does qualify as a Moderate Income Household), such household’s Unit shall be considered a Moderate Income Unit (and the Rent may be increased to one-twelfth of thirty
percent of one hundred ten percent (110%) of Median Income upon sixty (60) days written
notice to the household) and the Owner shall rent the next available Lower Income Unit to a Lower Income Household to comply with the requirements of Section 2.1 above. In the event
1010\0!3114782.2
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that the income of a Lower Income Household or a Moderate Income Household increases above
the qualifying limit for a Moderate Income Household, the rent shall remain at the level required
for a Moderate Income Unit and the Unit shall be deemed to be a Moderate Income Unit until the
occupying household vacates the Unit, and the next available Unit shall be rented to a Lower
Income Household or an Moderate Income Household as necessary to meet the requirements of
Section 2.1 above. Moreover, a Unit occupied by a Lower Income Household or Moderate
Income Household shall be deemed, upon the termination of such Lower Income Household’s or Moderate Income Household’s occupancy, to be continuously occupied by a Lower Income
Household or a Moderate Income Household, as applicable, until reoccupied, at which time the
character of the Unit shall be redetermined.
04 If the Development is subject to federal low income housing tax credit
requirements, the provisions of those requirements regarding assumed household size and
continued occupancy by households whose incomes exceed the eligible income limitations and
rents to be charged to those households shall apply in place of the provisions set forth in
subsections 2.2(b) and 2.3(a) above.
2.4 . . Lease P~mmm . Owner shall include in leases for all Units provisions which
authorize Owner to immediately terminate the tenancy of any household one or more of whose
members misrepresented any fact material to the household’s qualification as a Lower Income Household or a Moderate Income Household. Each lease or rental agreement shall also provide
that the household is subject to annual certification in accordance with Section 3.1 below, and
that, if the household’s income increases above the applicable limits for a Lower Income
Household or a Moderate Income Household, as applicable, such household’s Rent may be
subject to increase.
2.5 Section 8 Certificate. The Owner will accept as tenants, on the same
basis as all other prospective tenants, persons who are recipients of federal certificates for rent
subsidies pursuant to the existing housing program under Section 8 of the United States Housing
Act, or its successor. The Owner shall not apply selection criteria to Section 8 certificate or
voucher holders that is more burdensome than criteria applied to all other prospective tenants,
nor shall the Owner apply or permit the application of management policies or lease provisions
with respect to the Development which have the effect of precluding occupancy of units by such
prospective tenants.
2.6 . Converslpn . The Owner shall not convert Development units to
condominium or cooperative ownership or sell condominium or cooperative conversion rights to the Property during the Term of this Agreement.
ARTICLE 3
INCOME CERTIFICATION AND REPORTING
3.1 . Income QhfimWm . The Owner will obtain, complete and maintain on file,
immediately prior to initial occupancy and annually thereafter, income certifications from each
Lower Income Household and each Moderate Income Household renting any of the Units. The
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Owner shall make a good faith effort to verify that the income provided by an applicant or
occupying household in an income certification is accurate by taking one or more of the
following steps as a part of the verification process: (1) obtain a pay stub for the most recent pay
period; (2) obtain an income tax return for the most recent tax year; (3) conduct a credit agency
or similar search; (4) obtain an income verification form from the applicant’s current employer;
(5) obtain an income verification form from the Social Security Administration and/or the
California Department of Social Services if the applicant receives assistance fi-om either of such agencies; or (6) if the applicant is unemployed and has no such tax return, obtain another form of
independent verification. Copies of tenant income certifications shall be available to the City
upon written request.
3.2 . 0 City . Each year Owner shall submit an annual report to the City
and the Agency, in a form approved by the City and the Agency. The annual report shall include
for each Unit covered by this Agreement, the Rent and the income and household size of the
household occupying the Unit. The report shall also state the date the tenancy commenced for
each rental Unit and such other information as the City may be required by law to obtain.
. 3.3 Bdditiow. Owner shall provide any additional information
reasonably requested by the City or the Agency. Upon 5 days prior written request and during
regular business hours, the City and the Agency shall have the right to examine and make copies
of all books, records or other documents of Owner which pertain to any Unit.
3.4 &cords. Owner shall maintain complete, accurate and current records pertaining
to the Units, and, upon 5 days prior written request by the City or the Agency, shall permit any
duly authorized representative of the City and the Agency to inspect records, including records
pertaining to income and household size of tenant households.
3.5 Welfare Act Cow . Unless Owner is otherwise exempt from the
following requirement under applicable law, Owner shall comply with the requirements of the
Public Responsibility and Work Opportunity Reform Act of 1996, as amended, including,
without limitation, verifying the citizenship or immigration status of prospective tenants in
accordance with the verification procedures established under such Act.
ARTICLE 4
OPERATION OF THE DEVELOPMENT
4.1 v. The Development shall be operated only for residential use. No
part of the Development shall be operated as transient housing.
4.2 . e urlth J,om . Owner shall comply with all the terms and provisions of the Loan Agreement.
4.3 Property Tax Em. Owner shall only apply for a property tax exemption
for the Property under Revenue and Taxation Section 2 14(g), and not under any other provision
10lOW6Mi4762.2
IV2396 6
75
. of law, without the City’s prior written consent, which consent, shall not be unreasonably
withheld.
4.4 Taxes. Owner shall pay all real and personal property taxes,
assessments and charges and all franchise, income, employment, old age benefit, withholding,
sales, and other taxes assessed against it, or payable by it, at such times and in such manner as to
prevent any penalty from accruing, or any lien or charge from attaching to the Property; provided, however, that Owner shall have the right to contest in good faith, any such taxes,
assessments, or charges. In the event Owner exercises its right to contest any tax, assessment, or
charge against it, Owner, on final determination of the proceeding or contest, shall immediately
pay or discharge any decision or judgment rendered against it, together with all costs, charges
and interest.
4.5 Nondiscrimination. All of the Units shall be available for occupancy on a
continuous basis to members of the general public who are income eligible. Owner shall not
give preference to any particular class or group of persons in renting or selling the Units, except
to the extent that the Units are required to be leased to Lower Income Households and Moderate
Income Households or to Agency or City displacees pursuant to Section 4.6 below. There shall
be no discrimination against or segregation of any person or group of persons, on account of
race, color, creed, religion, sex, sexual orientation, marital status, national origin, or ancestry, in
the leasing, subleasing, transferring, use, occupancy, tenure, or enjoyment of any Unit nor shall’
Owner or any person claiming under or through the Owner, establish or permit any such practice
or practices of discrimination or segregation with reference to the selection, location, number,
use, or occupancy, of tenants, lessees, sublessees, subtenants, or vendees of any Unit or in
connection with the employment of persons for the operation and management of the
Development. All deeds, leases or contracts made or entered into by Owner as to the Units or
the Development or portion thereof, shall contain covenants concerning discrimination as
prescribed by the Loan Agreement.
4.6 Prefi-=e to DisDlacees . Owner shall give a preference in the rental of any Units
to eligible households displaced by activity of the Agency or the City upon receiving a written
request of the Agency or the City regarding such displacement.
ARTICLE 5
PROPERTY MANAGEMENT AND MAINTENANCE
5.1 . . . . e . The Owner is responsible for all management
functions with respect to the Development, including without limitation the selection of tenants,
certification and recertification of household size and income, evictions, collection of rents and
deposits, maintenance, landscaping, routine and extraordinary repairs, replacement of capital
items, and security. The City and the Agency shall have no responsibility over management of
the Development. The Owner shall retain a professional property management company approved by the City in its reasonable discretion to perform its management duties hereunder,
unless the Owner demonstrates to the City that it has the capacity to self-manage the
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. Development and receives written City approval for self-management. A resident manager shall
also be required, selection of whom shall be at the discretion of the Owner.
5.2 Rer>orts . The Development shall at all times be
managed by an experienced management agent reasonably acceptable to the City, with demonstrated ability to operate residential facilities like the Development in a manner that will
provide decent, safe, and sanitary housing (as approved, the “Management Agent”). The Owner
shall submit for the City’s approval the identity of any proposed Management Agent. The Owner
shall also submit such additional information about the background, experience and financial condition of any proposed Management Agent as is reasonably necessary for the City to
determine whether the proposed Management Agent meets the standard for a qualified
Management Agent set forth above. If the proposed Management Agent meets the standard for a
qualified Management Agent set forth above, the City shall approve the proposed Management
Agent by notifying the Owner in writing. Unless the proposed Management Agent is
disapproved by the City within thirty (30) days, which disapproval shall state with reasonable
specificity the basis for disapproval, it shall be deemed approved. The City hereby approves
BRIDGE Property Management Company as the initial management agent for the Development.
5.3 . ce Review . The City reserves the right to conduct an annual (or more frequently, if deemed necessary by the City) review of the management practices and financial
status of the Development. The purpose of each periodic review will be to enable the City to
determine if the Development is being operated and managed in accordance with the
requirements and standards of this Agreement. The Owner shall cooperate with the City in such
reviews.
5.4 went w. If, as a result of a periodic review, the City
determines in its reasonable judgement that the Development is not being operated and managed
in accordance with any of the material requirements and standards of this Agreement, the City shall deliver notice to Owner of its intention to cause replacement of the Management Agent,
including the reasons therefor. Within fifteen (15) days of receipt by Owner of such written
notice, City staff and the Owner shall meet in good faith to consider methods for improving the
financial and operating status of the Development, including, without limitation, replacement of
the Management Agent.
If, after such meeting, City staff recommends in writing the replacement of the
Management Agent, Owner shall promptly dismiss the then Management Agent, and shall appoint as the Management Agent a person or entity meeting the standards for a Management
Agent set forth in Section 5.2 above and approved by the City pursuant to Section 5.2 above.
Any contract for the operation or management of the Development entered into by Owner
shall provide that the contract can be terminated as set forth above. Failure to remove the Management Agent in accordance with the provisions of this Section shall constitute default
under this Agreement, and the City may enforce this provision through legal proceedings as
specified in Section 6.3.
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5.5 . . nroval of Nt Pohcu. The Owner shall submit its written
management policies with respect to the Development to the City for its review, and shall amend
such policies in any way necessary to ensure that such policies comply with the provisions of this
Agreement.
5.6 . Property Marntenance. The Owner agrees, for the entire Term of this Agreement,
to maintain all interior and exterior improvements, including landscaping, on the Property in
good condition and repair (and, as to landscaping, in a healthy condition) and in accordance with
all applicable laws, rules, ordinances, orders and regulations of all federal, state, county,
municipal, and other governmental agencies and bodies having or claiming jurisdiction and all
their respective departments, bureaus, and officials.
The City and the Agency place prime importance on quality maintenance to protect its
investment and to ensure that all Agency and City-assisted affordable housing projects within the
City are not allowed to deteriorate due to below-average maintenance. Normal wear and tear of
the Development will be acceptable to the City and the Agency assuming the Owner agrees to
provide all necessary improvements to assure the Development is maintained in good condition.
The Owner shall make all repairs and replacements necessary to keep the improvements in good
condition and repair.
In the event that the Owner breaches any of the covenants contained in this section and
such default continues for a period of five (5) days after written notice from the City with respect
to graffiti, debris, and waste material, or thirty (30) days after written notice with respect to general maintenance, landscaping and building improvements, (and subject to any stricter
requirements included in any applicable City ordinance) then the City, in addition to whatever
other remedy it may have at law or in equity, shall have the right to enter upon the Property and
perform or cause to be performed all such acts and work necessary to cure the default. Pursuant
to such right of entry, the City shall be permitted (but is not required) to enter upon the Property
and perform all acts and work necessary to protect, maintain, and preserve the improvements and
landscaped areas on the Property, and to attach a lien on the Property, or to assess the Property,
in the amount of the reasonable expenditures arising from such acts and work of protection, maintenance, and preservation by the City and/or costs of such cure, including an administrative
charge equal to ten percent (10%) of such expenditures, which amount shall be promptly paid by
the Owner to the City upon demand.
ARTICLE 6
MISCELLANEOUS
6.1 b. The provisions of this Agreement shall apply to the Property for the entire
Term even if the entire Loan is paid in full prior to the end of the Term. This Agreement shall
bind any successor, heir or assign of Owner, whether a change in interest occurs voluntarily or
involuntarily, by operation of law or otherwise, except as expressly released by the City and the
Agency. The City makes the Loan on the condition, and in consideration of, this provision, and
would not do so otherwise.
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6.2 Covenz~@ to Run With &&nd. The City, the Agency, and Owner hereby
declare their express intent that the covenants and restrictions set forth in this Agreement shall
run with the land, and shall bind all successors in title to the Property, provided, however, that on
the expiration of the Term of this Agreement said covenants and restrictions shall expire, Each
and every contract, deed or other instrument hereafter executed covering or conveying the
Property or any portion thereof shall be held conclusively to have been executed, delivered and
accepted subject to such covenants and restrictions, regardless of whether such covenants or
restrictions are set forth in such contract, deed or other instrument, unless the City and the
Agency expressly release such conveyed portion of the Property from the requirements of this
Agreement.
6.3 . the Citv wthe If Owner fails to perform any
obligation under this Agreement, and fails to cure the default within 30 days after the City or the
Agency has notified the Owner in writing of the default or, if the default cannot be cured within
30 days, failed to commence to cure within 30 days and thereafter diligently pursue such cure,
the City and the Agency shall have the right to enforce this Agreement by any or all of the
following actions, or any other remedy provided by law:
(a) m the Lou. The City may declare a default under the Note,
accelerate the indebtedness evidenced by the Note, and proceed with foreclosure under the Deed
of Trust.
09 Action to co-Performance . The City and/or the
Agency may bring an action at law or in equity to compel Owner’s performance of its obligations
under this Agreement, and/or for damages.
(c) medies Provided Under Jw. The City may exercise any
other remedy provided under the Loan Agreement.
6.4 meys Fees and Cc&. Jn any action brought to enforce this Agreement, the
prevailing party shall be entitled to all reasonable costs and expenses of suit, including
reasonable attorneys’ fees. This section shall be interpreted in accordance with California Civil
Code Section 1717 and judicial decisions interpreting that statute.
6.5 . . . Band The City, the Agency, and Owner shall cause this Agreement, and all amendments and supplements to it, to be recorded against the Property in the
Official Records of the County of San Diego.
6.6
California.
C&w J .aw. This Agreement shall be governed by the laws of the State of
6.7 e. This Agreement may be amended only by a written instrument
executed by all the parties hereto or their successors in title, and duly recorded in the real
property records of the County of San Diego, California.
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lll23i96 10
. 6.8 Notice. All notices given or certificates delivered under this Agreement shall be
deemed received on the delivery or refusal date shown on the delivery receipt, if: (i) personally
delivered by a commercial service which furnishes signed receipts of delivery or (ii) mailed by
certified mail, return receipt requested, postage prepaid, addressed as shown on the signature
page. Any of the parties may, by notice given hereunder, designate any further or different
addresses to which subsequent notices, certificates or communications shall be sent.
6.9 . . Seved2&y . If any provision of this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining portions of this
Agreement shall not in any way be affected or impaired thereby.
IN WITNESS WHEREOF, the City, the Agency, and Owner have executed this
Agreement by duly authorized representatives, all on the date first written above.
CITY:
CITY OF CARLSBAD, a municipal
corporation
Address: Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008
By:
its:
Attn: Housing and Redevelopment Director
AGENCY:
Carlsbad Redevelopment Agency, Carlsbad
California, a public body, corporate and
politic
Address:
Housing and Redevelopment Department
2965 Roosevelt Street, Suite B
Carlsbad, CA 92008
By:
Its:
Attn: Housing and Redevelopment Director
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11/23/96 11
..2-. c\_-
. c-
Address:
One Hawthorne St., 4th Floor
San Francisco, CA 94 105 Attention: President
APPROVED AS TO FORM
By: Ron Ball
City Attorney
101OU5\114762.2
lll23l96
OWNER:
POINSETTIA HOUSING ASSOCIATES, a
California Limited Partnership
By: BRIDGE Housing Corporation-
Southern California, a California nonprofit
public benefit corporation, its general
Partner
By:
Its:
12
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1010\05\114762.2
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EXHIBIT A
Property Description
A-l
.-.
- - -I--;
? . ExlTibit !j .
i ’ .5 TheCityofC~~sbadWous~~&RedeuelopmentDepartm~t
AREPORTTOTHE
HOUSING COMMISSION
staff: Craig Rulz Munagemexxt Analymt
Item No. 1 ,
DATE: SEPTEMBER 29,1998
SUBJECT: SDP 98-09 - POINSETTIA PROPERTIES AFFORDABLE HOUSING
PROTECT - RECOMMENDATION OF APPROVAL TO THE CITY COUNCIL
TO PROVIDE $920,000 IN FINANCIAL ASSISTANCE FOR CONSTRUCTION
OF NINETY TWO AFFORDABLE APARTMENT UNITS TO SATISFY THE
REQUIREMENTS OF THE INCLUSIONARY HOUSING ORDINANCE FOR
THE POINSETTIA PROPERTIES SPECIFIC PLAN.
I. RECOMMENDATION
That the Housing Commission ADOPT Resolution No. 98-014, recommending
APPROVAL to the City Council to provide $920,000 in financial assistance from the
Housing Trust Fund to Bridge Housing Corporation for construction of ninety two (92)
affordable apartment units to satisfy the requirement of the inclusionary housing
ordinance for the Poinsettia Properties Specific Plan.
II. PROJECT BACKGROUND
On August 27, 1998, the Housing Commission recommended approval of the Site
Development Plan and the related Affordable Housing Agreement for the construction
of a 92 unit affordable apartment project for the Poinsettia Properties Specific Plan. At
the August meeting, the issue of financial assistance was not discussed.
III. PROTECT DESCRIPTION n
The Specific Plan is located generally on the easterly side of Avenida En&as, north of
Poinsettia Lane and west of Carlsbad Boulevard west of Carlsbad Boulevard. The
affordable units will be located in the northeast corner of the Specific Plan. The
affordable project will be developed by Bridge Housing Corporation (Developer).
The proposed 92 unit affordable apartment project consists of seven separate residential
structures. The proposed development includes 36 one bedroom (39%), 44 two
bedroom (48%) and 12 three bedroom units (13%). The project will also feature an
approximately 2,500 square foot recreation building, laundry facilities; a “tot-lot” with
playground equipment; a swi mming pool; a private pedestrian trail system and 192
parking spaces.
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i SDP 98-09 - POINSETTIA PROPERTIES AFFORDABLE HOUSING PROJECT
SEPTEMBER 29,1998
PAGE 2
IV. DEVELOPMENT TEAM
The Master Developer for the Specific Plan has retained Bridge Housing Corporation
(Bridge) to develop the affordable housing project. Bridge has developed and managed
numerous affordable housing projects throughout the United States. Bridge has
previous experience in the City of Carlsbad, having developed the highly successful 344
unit Villa Loma affordable apartment project. The Architect for the project is Brad
Burke of Studio E Architects. The architect has designed several award wining projects
throughout the State.
V. FINANCIAL ASSISTANCE
A. Cost Reasonableness
The developer has provided a detailed development proforma for review by staff and
the Housing Commission (See Attachment 2). Since development costs are one of the
key variables deter mining the need for subsidies, it is important that those costs be
reasonable. At approximately $11.8 million, including land, the average unit cost of
$124,000 is generally consistent with typical affordable multi-family development
within the City.
B. Undue Gain
It is important that any financial assistance have the effect of making the units more
affordable and not creating undue gain for any party. The Developer will receive a
“Developer Fee” of $819,011, or approximately 7%of total project costs. Staff is
proposing that the Developer receive 76% of the developer fee ($619,011) at time of
permanent financing. The remainder of the fee, $200,000, would be repaid over the first
ten years of the project from the Cash Balance after the City Loan has been repaid. Staff
feels that the developer fee is within acceptable Iimits for a project of this size and
affordability. Further, the deferral of approximately 24% of the developer fee is
consistent with previous recommendations adopted by the Housing Commission for
similar projects.
The Developer is requesting that they receive $719,011 at permanent financing while
deferring $100,000 of the developer fee during the first ten years of the project. The
attached proforma reflects the Developer’s proposal. Should the Commission adopt
staff’s recommendation, the proforma will need to revised accordingly.
C. Subsidy Analysis
The Developer is proposing to finance the project with tax exempt bonds and 4% tax
credits. Under this scenario, the developer would receive an approximately $4.1 milhon
from the bond issuance and will raise $2.7 million through the sale of the tax credits,
resulting in an approximate $5 million financing gap. Under this scenario, staff is
recommending the City provide the $920,000 in financial assistance while the Master
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SDP 98-09 - POINSETTIA PROPERTIES AFFORDABLE HOUSING PROJECT
SEPTEMBER 29,1998
PAGE 3
Developer would provide $1.18 million in financial assistance and $2.9 million in land
contribution. Under this option, the City’s $920,000 million assistance equates to $10,000
per affordable unit.
The following is a summary of the sources and uses of funds based on the estimated
development costs and the proposed financing structure. The developer’s detailed
proforma is attached as Exhibit 5:
Senior Bonds $4,125,000 $44,800
Master Developer Contribution 800,000 8,700
Citv Contribution 920.000 10.000 .
Deferred City Interest
Land Contribution
Deferred Developer Fee
25;ooo ‘300
2,900,000 31,500
200,000 2,170
Developer Equity 31000 -300
Tax Credit Investor Equity 2,726,OOO 29,800 ,. ‘,.i. I_b .j. ill :,;.“ ,“’ T&al S&i&‘$si ~~~~~~~.~~~~~~$~~;~~oo,oo~,. ,,:~:‘:;:~,~i~b:‘~~~::.“.~~~$,127;?00’ ,e_,,
D. Form of Assistance
City assistance will be in the form of a residual receipts loan secured by a note and deed
of trust. The loan will begin accruing interest during construction of the Improvements.
The outstanding principal and accrued interest on the City loan will be amortized over
fifty-five years and repaid from cash surplus in equal annual installments of principal
and interest. In the event that there is not adequate cash surplus to repay the City loan,
the outstanding balance shall accrue with simple interest at 3% per annum. The City
may also receive repayment of the loan through any savings between the amount
budgeted for construction and the actual construction cost. These savings will be split
50% to the City and 50% to the developer.
The financial assistance will be provided from the City of Carlsbad’s Housing Trust
Fund. The Fund currently has a balance of approximately $1.7 million.
E. Security
As stated above, the City takes a security interest in the property for the affordable
housing project. In addition, the Developer will be required to provide Completion
Bonds to both the City and the permanent lender to insure that construction is
completed.
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7 SDP 98-09 - POINSETTIA PROPERTIES AFFORDABLE HOUSING PROJECT
SEPTEMBER 29,1998
PAGE 4
F. Risk
In its role as a lender to the project, the City is exposed to three risks inherent to real
estate development. These risks generally include 1) predevelopment (project does not
get to construction, 2) construction (project cannot be completed, cost overruns,
contractor problems), and 3) operation (revenues do not cover expenses). Adding to
this risk, any City financial assistance will be subordinated to conventional financing.
A number of factors mitigate the risks. First, the development team has a strong track
record with similar affordable housing projects. The presence of other major financial
commitments, such as a tax credit investment, is also key as this means that other
stakeholders depend on the success of the project both short and long term. By its
nature, affordable housing presents some, but very limited market risk because of
deeply discounted rents. Finally, the vulnerable position of City and other
subordinated financing is a feature which helps attract the necessary private financing.
VI. AFFORDABLE HOUSING AGREEMENT
The Housing Commission has previously reviewed and recommended approval of the
Affordable Housing Agreement for this project. Prior to final map, the developer will
be required to execute the agreement. The Agreement with the City will bind the
Developer and subsequent owners to the specifics of the affordable housing project
including affordable rental rates, household income limits; a construction schedule;
amount and form of City assistance; compliance reporting requirements and
implementation agreements (e.g. loan agreements, regulatory agreements, trust deed,
etc.).
VII. FINANCIAL ASSISTANCE AGREEMENT
A copy of the draft Financial Assistance Agreement and related documents are
provided as the exhibits (Exhibit 3) to this report for review by the Housing
Commission. The Commission is being requested to review and recommend approval
of this agreement and related documents in substantially the form presented and subject
to approval by the City Attorney.
VIII SUMMARY
It is the role of the Housing Commission to make recommendations to the City Council
based on several considerations with respect to affordable housing projects. These are:
The proposal’s effectiveness in serving the City’s needs and priorities as expressed in the
Housing Element of the General Plan and the Consolidated Plan.
. A
SDP 98-09 - POINSETTIA PROPERTIES AFFORDABLE HOUSING PROJECT
SEPTEMBER 29,1998
PAGE 5
The proposal’s consistency with the City’s affordable housing policies and
ordinances as expressed in the Housing Element, Inclusionary Housing
Ordinance, Density Bonus Ordinance, etc.
The proposal’s development and operating feasibility, emphasizing the
development team capacity, financing sources and the role of the City in
providing financial assistance or incentives.
The Poinsettia Properties affordable apartment project is proposed by a capable
development team led by a credible non-profit developer that is committed to
affordable housing. The financing structure of the project is creative and sound. The
proposed City assistance meets the City’s three key underwriting goals of a strong
borrower, reasonable project costs and a high degree of leveraging. The project quality
includes good design and location. City housing goals are supported by the project’s
unit mix and affordability.
It is the Affordable Housing Policy Team’s (staff) recommendation that the Housing
Commission approve the resolution of support recommending that the proposed
financial assistance be approved by the City Council. Also, the Staff Team recommends
that the Commission recommend approval of the Financial Assistance Agreement and
related documents in substantially the for presented and subject to approval by the City
Attorney.
VIII. EXHIBITS
1. Housing Commission Resolution No. 98-014
2. Proforma
3. Draft Financial Assistance Agreement, Loan Agreement, Deed of Trust, and Regulatory
Agreement.
HOUSING COMMISSION RESOLUTION NO. 98-014
THAT THE HOUSING RECOMMEND APPROVAL TO THE CITY
COUNCIL TO $920,000 IN FINANCIAL ASSISTANCE FOR THE
CONSTRUCTION OF NINETY TWO AFFORDABLE
APARTMENT UNITS TO HELP SATISFY THE REQUIREMENTS
OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE
POINSETTIA PROPERTIES SPECIFIC PLAN.
APPLICANT: BRIDGE HOUSING CORPORATION
CASE NO: SDP 98-09
WHEREAS, the master developer of the Poinsettia Properties Specific Plan, 8 II HSL/BP/Magellan, L.L.C, has proposed to construct 92 apartment units affordable to lower income I
households as a means to satisfy a portion of their affordable housing obligation as permitted by
Carlsbad Municipal Code Section 21.85 of the City’s Inclusionary Housing Ordinance; and
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City of Carlsbad’s Housing Commission for review and consideration; and 13
WHEREAS, the master developer’s proposal to construct said units has been submitted to the
WHEREAS, said Housing Commission did, on the 27th day of August, 1998, hold a public
l5 II meeting to consider said proposal to construct 92 affordable housing apartment units; and I
16 WHEREAS, at the conclusion of said special public meeting, the Housing Commission
17 recommended approval of the proposal to the Planning Commission and City Council; and
18 WHEREAS, said Housing Commission did, on the 29th d ay of September, 1998, hold a public
19 meeting to consider the request for City financial assistance for the construction of said 92 affordable
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housing apartment units by of the affordable housing developer, Bridge Housing Corporation; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons desiring to be
heard, said Commission considered all factors relating to the proposal to construct said affordable
housing units.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City
of Carlsbad, California, as follows:
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II I. The above recitations are true and correct.
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2. The request for City financial assistance is consistent with the goals and objectives of
the City of Carlsbad’s Housing Element, Consolidated Plan, the Inclusionary Housing
Ordinance, and the Carlsbad General Plan.
3. The request for City financial assistance will assist the affordable housing developer
to construct a total of 92, one, two and three bedroom affordable apartment units. The
project, therefore, has the ability to effectively serve the City’s housing needs and
priorities as expressed in the Housing Element and the Consolidated Plan.
4. That based on the information provided within the Housing Commission Staff Report
and testimony presented during the public meeting of the Housing Commission on
September 29, 1998, the Housing Commission hereby ADOPTS Resolution No. 98-
014, recommending APPROVAL to the City Council to provide up $920,0000 in
financial assistance from the City of Carlsbad’s Housing Trust Fund to Bridge
Housing Corporation for the construction of ninety two (92) affordable apartment
units to help satisfy the requirements of the Inclusionary Housing Ordinance for the
Poinsettia Properties Specific Plan.
5. That the Housing Commission recommends that the City Manager or his designee be
authorized by the City Council to execute all documents related to provision of the
City assistance, including but not limited to a Loan Agreement, Note, Deed of Trust
and Regulatory Agreement, in substantially the form presented to the Housing
Commission on September 29, 1998, and subject to review and approval by the City
Attorney.
PASSED, APPROVED, AND ADOPTED at a meeting of the Housing Commission of the
City of Carlsbad, California, held on the 29th of September, 1998, by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
KATHLEEN DUNN WELLMAN, CHAIRPERSON
CARLSBAD HOUSING COMMISSION
DEBORAH K. FOUNTAIN
HOUSING AND REDEVELOPMENT DIRECTOR
HC RESO NO. 98-O 14
PAGE 2
. - Exhibit 6
Minutes of:
Time of Meeting:
Date of Meeting:
Place of Meeting:
HOUSING COMMISSION
6:00 P.M.
SEPTEMBER 29, 1998
CITY COUNCIL CHAMBERS
CALL TO ORDER:
Chairperson Wellman called the Special Meeting to order at 6:05 p.m.
PLEDGE OF ALLEGIANCE:
Commissioner Noble led the pledge of allegiance.
ROLL CALL:
Present: Chairperson Wellman, Commissioners Escobedo, Latas, Noble, Rose, Scarpelli, and Walker
Absent: Commissioner Calverley
Staff Present: Debbie Fountain, Housing and Redevelopment Director
Craig Ruiz, Management Analyst
Lori Rosenstein, Management Analyst
.Mike Grim, Associate Planner, Planning Department
Dennis Turner, Principal Planner, Planning Department
APPROVAL OF MINUTES:
ACTION: Motion by Commissioner Scarpelli, and duly seconded, to approve the Minutes of the
Regular Meeting of August 27,1998, as submitted.
VOTE: 7-o-o
AYES: Escobedo, Latas, Noble, Rose, Scarpelli, Walker, Wellman
NOES: None
ABSTAIN: None
COMMENTS FROM THE AUDIENCE ON ITEMS NOT LISTED ON THE AGENDA:
There were no comments from the audience.
NEW BUSINESS:
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1. SDP 98-09 - POINSETTIA PROPERTIES AFFORDABLE HOUSING - RECOMMENDATION OF
APPROVAL TO THE CITY COUNCIL TO PROVIDE $920,000 FINANCIAL ASSISTANCE FOR
CONSTRUCTION OF 92 AFFORDABLE APARTMENT UNITS TO SATISFY THE REQUIREMENTS OF
THE INCLUSIONARY HOUSING ORDINANCE FOR THE POINSETTIA PROPERTIES SPECIFIC
PLAN.
Craig Ruiz reviewed the background of the request and stated that this item was before the Commission on August 27,
1998. At that meeting the Commission recommended approval of both the Site Development Plan and the Affordable
Housing Agreement for the Poinsettia Properties Specific Plan for the affordable housing component. The affordable
apartment project is going to consist of 92 units with 36 one-bedroom units, 44 two-bedroom units, and 12 three-
bedroom units. The rent levels will be rented for 60 percent of median income or less. The project developer for the
affordable housing component is Bridge Housing Corporation. They have a lot of developmental experience both city-
and nation-wide, and they developed the highly successful Villa Loma affordable apartment project.
HOUSING COMMISSION MINUTES
SEPTEMBER 29, 1998
PAGE 2
Mr. Ruiz explained that the total development cost for this project is roughly $11.8 million, which works out to
$124,000 per unit. This is in line with previous projects this Commission has reviewed with similar costs for similar
projects. The primary financing for this project is going to be a combination of tax-exempt funds and 4 percent tax
credits, which will raise the majority of the money for this project. The master developer for Poinsettia Properties is
contributing the land for this site, valued at $2.9 million, to be verified by Staff through an appraisal at a later date.
The developer is also contributing $900,000 in cash to be disbursed during the construction of this project.
Mr. Ruiz stated that a request is being made for financial assistance for $920,000, which works out to $10,000 per unit,
and discussed the form of assistance as outlined on Page 3 in the Housing Commission report.
Through negotiations with the developer, the developer fee, has been limited to 7 percent of the total project cost--
similar to what has been done on other projects. This currently amounts to $820,000. The tax credit regulations would
allow them to go to $1,200,000.
Mr. Ruiz explained deferral of the developer fee, stating that in three previous projects, deferral was necessary to make
the project work. In this instance, however, it may not be necessary to defer a portion. Staff and Bridge have discussed
that deferral would be at the developer’s discretion. If the Commission agrees with the loan agreement, there is a
modification that will need to be made as related to deferral of the fe,e.
Mr. Ruiz stated that one item not mentioned in the Staff report is the public facility fee waiver. In the Proforma, they do
not include paying the public facility fee. In 1979 the City Council adopted the public facility fee by Policy 17 to
ensure that public services and facilities are available concurrent with community needs and prior to development.
However, there are exceptions as to who needs to’ pay that fee and there is an exemption for affordable housing
projects. Staff has waived that fee on previous projects and if the Commission elects to support the fee waiver, Staff
would add an item to the findings of the Resolution.
It is Staffs recommendation that the Commission take three actions: (1) Recommend approval of financial assistance
in the amount of $920,000. (2) Recommend to the City Council approval of the loan agreement, note, deed of trust, and
regulatory agreement in the form as presented and (3) Recommend the waiver of the public facility fee.
Chairperson Wellman opened the item for discussion among the Commission members.
Chairperson Wellman asked for the estimated amount of the public facility fee for this project.
Mr. Grim stated that it is 3.5 percent of the evaluation of the property if they are not in a CFD. Otherwise, it goes down
to 1.82 percent of the evaluation of the property. This is based on the evaluation of the building, not the land.
Ms. Fountain explained that it would be more detailed once the project is actually approved. They still need to get a
SDP, but the estimate of the fee is $200,000.
Chairperson Wellman asked if that would be shown on a future chart,
Ms. Fountain stated that it has already been taken out of their Proforma.
Chairperson Wellman asked if it is then shown as a contribution of what the City is putting in.
Ms. Fountain stated that it would be as an additional contribution or assistance from the City, in addition to providing
assistance.
Commissioner Latas asked if deferment of the developer fee was going to be a fourth action the Commission would
need to take.
HOUSING COMMISSION MINUTES
SEPTEMBER 29, 1998
PAGE 3
Mr. Ruiz stated yes, that a motion could be made to amend the loan agreement.
Commissioner Scarpelli asked if there was a rationale for waiving the facilities fee other than the fact that it has been
waived in the past.
Mr. Ruiz stated that in their proposal to the Planning Department for this project, they have shown that the public
facilities requirement and the need for it has already been met or will be met as a part of this project. There will not be
a shortage of public facilities, so they are showing that it can be met, even with the waiver of this fee, with no burden
set on the community.
Chairperson Wellman asked if Staff has presented that finding to the Planning Commission.
Ms. Fountain stated it will be part of the final report that goes forward, but the Planning Commission has not seen it yet.
Actually it is the City Council who takes action to waive the fee on a case-by-case basis.
Ms. Fountain stated from Staffs standpoint, assistance is needed to help this project work financially. It is another way
to assist a project that we have done in the past on affordable housing such as Villa Loma and Laurel Tree. It is a way
of not having to write a check for the additional amount. The fee can be waived with the findings that the facilities are
available, and that waiver of the fee is not going to have an impact on the City. It is basically additional public
assistance to the project.
Ms. Fountain said the City can either write a check for $200,000 to pay the fees, or recommend that the fees be waived
because it is an affordable housing project and the project can meet it’s public facilities needs.
Commissioner Latas stated that at the last meeting the Commission discussed the possibility of not getting the private
bond and 4 percent tax credit financing, and asked if the City would make the loan if not approved.
Mr. Ruiz stated that the 4 percent tax credit is more of a certainty than not as long as the developer meets their timelines
and the CHFA Loan is approved. If they get their approvals from the City, and apply by the first part of 1999, the
project should get it’s approvals.
Chairperson Wellman asked if for some reason it did not happen, would the City be bound to this contribution of
$920,000 or is that only if everything else is in place and they could actually build.
Mr. Ruiz stated that everything would have to be in place. One of the conditions of disbursing the City money is that
the developer have all of their permanent financing and commitments in place, and all of it comes together in an escrow
process.
Chairperson Wellman invited the applicant to speak.
Lydia Tan, Bridge Housing Corporation, San Francisco, California stated that they are in concurrence with Staffs
report and recommendations. They will be planning on making an application to SDLAC for the Bond Allocation
toward the end of this year and will know at the beginning of next year if that happens. It is hoped that they will be on
track for construction towards late spring of 1999.
Chairperson Wellman asked for clarification of the land contributions.
Ms. Tan stated that the master developer is contributing the land to the project, but the land is all part of the deal, and
Bridge has been involved from the beginning in trying to negotiate how the deal is going to get put together. Bridge
does not own the land, but eventually they will, so it is certainly part of the total project cost.
HOUSING COMMISSION MINUTES
SEPTEMBER 29,1998
PAGE 4
Chairperson Wellman asked if there is any sense that the figure 2.9 million is a correct appraisal.
Ms. Tan stated that the master developer has had an appraisal done on the property, and it was 2.9 million on a prorated
basis.
Chairperson Wellman asked if Bridge is requesting approval of the plan as presented by Staff.
Ms. Tan responded yes.
Mr. Ruiz referred to Page 8 of the Loan Agreement, Section 2.13 (a), Developer Fees: Net Proceeds of Permanent
Financing. Staff recommends it read “The maximum cumulative developer fee that may be paid to any entity or entities
providing development services to the development, whether paid up-front or on a deferred basis, at the discretion of
the developer, shall not exceed Eight Hundred Nineteen Thousand Dollars ($819,000)“. The remainder of that
paragraph about deferring would be deleted.
Chairperson Wellman asked if the cost went down, would the City still be locked into the $819,000 or would it be the
proposed 7 percent of the costs.
Ms. Fountain stated that the way it is written, it cannot exceed $819,000. If the cost went down, it would be a larger
percentage than 7 percent. If the Commission wants it to say that it cannot be more than 7 percent of the total project
costs, it would need to be stated.
Chairperson Wellman stated that the language in the proposal indicates this amount is based on 7 percent of the total
project cost. If that is not what is meant, it needs to be clear on what is being approved.
Ms. Tan stated that the 7 percent is a rule-of-thumb number that Staff looked at when they looked at all the other
projects. Carrillo Ranch is a few more units than Bridge, but they have a higher developer fee because of the
percentage. She added that developing Poinsettia at 92 units is going to take as much energy and as much work as
developing 116 units, and feels that 7 percent is a good way of measuring whether or not the developer fee that was
negotiated with Staff is appropriate. She added that it is going to take the same amount of work whether they save
money or not. To tie the developer fee to whether or not they save money is a direct disincentive for them. She
proposed that the fee be fixed, which actually saves money for the City.
Chairperson Wellman stated that it was her understanding that the applicant was willing to take a fixed amount of
$819,000 if they could receive all that money at the time of permanent financing, rather than deferring either the
$200,000 or the $100,000, having that being paid off over 10 years.
Ms. Tan stated it was certainly a part of it. The other part is that Bridge is agreeing to take a $200,000 lower developer
fee than they would otherwise be allowed under tax credit rules. Bridge has given up the developer fee that they could
otherwise get under tax credit rules, and the fixing of the fee, which they have agreed to do if the deferred fee is an
option. At this time they do plan on the $100,000 fee being deferred.
Ms. Fountain stated that for clarification purposes, she is not sure Staff really wanted to combine the two issues of
deferral and the maximum amount of the developer fee. The developer fee was more of a negotiated issue, she said.
Staff wanted a cap on how much the developer fee could be, because in the long run what happens is that they end up
helping to pay a portion of that because it is included in the total project cost. To make a project work financially, it is
often necessary to defer a portion of the developer fee to make sure there is enough cash to actually construct. If
Bridge needs to defer the fee, they will defer a portion of it. However, if for some reason the numbers come in slightly
different and they are able to get their developer fee at permanent financin,, (J then they would do that. It depends on the
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HOUSING COMMISSION MINUTES
SEPTEMBER 29, 1998
PAGE 5
total construction costs at the end. It is a negotiated position, but they are not tied in giving up one (developer fee) to
get the other (deferred developer fee flexibility).
Chairperson Wellman stated that it sounds like this is the maximum cumulative developer fee. It does not seem that it
speaks to the issue that the fee cannot be reduced. If that is the understanding of the applicant and the City, then that
should be stated. Again, it states, “The maximum cumulative developer fee that may be paid to any entity or entities
providing development services to the Development, whether paid up-front or on a deferred basis, at the discretion of
the developer, shall not exceed $8 19,000.”
Ms. Fountain stated that they are capping the maximum that they can get out of the project. Based on the current
Proforma, that is about 7 percent of their total estimated project costs.
Commissioner Scarpelli recommended changing the wording to remove the word “exceed.”
Ms. Tan stated she likes the language because it gives them the option to reduce the developer fee. #at she does not
want is to have it tied to a percentage of development costs. She likes the language as it is and feels she has enough
flexibility to make the project work.
Commissioner Scarpelli asked if they are saying that the developer may be willing to accept less than the $8 19,000 if it
makes the project work.
Ms. Tan stated that they are not in negotiations with the City. But on a voluntary basis, if they had to reduce the fee,
they would like to have the ability to do that.
Chairperson Wellman asked if the City agrees with the ceiling of $8 19,000.
Ms. Fountain stated Staff is recommending that the ceiling be $819,000. Only at the discretion of the applicant could it
be less, and they would not have to come back and negotiate that fee with the City, as long as it did not exceed
$8 19,000.
Chairperson Wellman asked if Bridge suddenly left, and they had another substitute applicant in, would this bind their
successors too.
Ms. Fountain stated yes.
Commissioner Latas stated that there is no mention that what the City is getting for this loan is 92 units that will
probably be rented at 60 percent median income.
Mr. Ruiz stated that the City’s Inclusionary Housing Ordinance restricts the affordable requirement at 80 percent of
median. Staff is only restricting 45 of the units to be for lower income units and the remainder at moderate. The reason
for this is because there are other regulations that will supersede this. When they go to get the tax credits and they
make that proposal, they will enter into a separate regulatory agreement with the Tax Credit Allocation Committee.
They will actually bind them to all of the units at 60 percent. That is how they are financing the deal and coming up
with their tax credits, which makes the Proforma work.
Chairperson Wellman asked if that is in writing somewhere, or is there an agreement signed that the City and the
applicant recognize that their entity regulations will end up superseding what they are signing presently.
Mr. Ruiz stated that when they make their application, the application comes back to the City through the State. The
City is one of the reviewing agencies. If Bridge was to change it, it would blow apart their Profonna, and they would
not have enough money to do the deal. The Proforma that they are using is also what they submit to the State, and it is
, HOUSING COMMISSION MINUTES
SEPTEMBER 29, 1998
PAGE 6
one of the attachments to this Agreement. If they were making radical changes to it, the City would see that in the
review process; the deal would not work; and they would not be living up to the terms and conditions of this
Agreement.
Chairperson Wellman stated that the Resolution states that the Commission is recommending that the City Council
approve 92 one, two, and three-bedroom units, and the Commission’s intent is that they are approving affordable
housing. It does not, however, specify the 36 one-bedroom, 44 two-bedroom, and 12 three-bedroom units. She added
that the Resolution should specify the specific breakdown as to what is being proposed.
Mr. Ruiz reminded the Commission that they have already taken this action when they recommended approval of the
Site Development Plan and the Affordable Housing Agreement.
Ms. Fountain explained that the Affordable Housing Agreement goes through the specifics of what actually is going to
be provided, and that is what is approved. She added that this is a separate document as to how the City is going to give
them money for their projects.
Mr. Ruiz added that the Inclusionary Ordinance requires that 10 percent of all the units be three-bedroom units.
Chairperson Wellman opened the public testimony and issued the invitation to speak.
David Ricker, Senior Lending Officer in Southern California for the Low-income Housing Fund, 4009 Conario,
Carlsbad, CA 92008, wished to compliment the Commission and the Staff in getting a developer of the caliber of
Bridge into this community to provide affordable housing. He stated developing affordable housing in Southern
California and in communities like Carlsbad is a very difficult process. As a citizen of Carlsbad, this has 100 percent of
his support, he said.
There being no other persons desiring to address the Commission on this topic, Chairperson Wellman declared the
public testimony closed and opened the item for discussion among the Commission members.
ACTION:
VOTE:
AYES:
NOES:
ABSTAIN:
Motion by Commissioner Scarpelli, and duly seconded, that the Housing Commission
ADOPT Resolution No. 98-O 14, recommending APPROVAL to the City Council to provide
$920,000 in financial assistance from the Housing Trust Fund to Bridge Housing
Corporation for construction of ninety- two (92) affordable apartment units to satisfy the
requirement of the Inclusionary Housing Ordinance for the Poinsettia Properties Specific
Plan, with the inclusion of Staff recommendations, given by Craig Ruiz, to include: (1)
Recommendation regarding the waiver of the public facilities fee, that the resolution be
amended to reflect that. (2) Page 8 of the Loan Agreement, Section 2.13 (a) be amended to
read “The maximum cumulative developer fee that may be paid to any entity or entities
providing development services to the Development, whether paid up-front or on a deferred
basis, at the discretion of the developer, shall not exceed $8 19,000.”
6-O-O
Escobedo, Noble, Rose, Scarpelli, Walker, Wellman
Latas
None
Commissioner Latas stated that he did not approve the Housing Agreement, therefore he did not vote in favor of the
loan.
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- EXHIBIT 7
HOUSING COMMISSION RESOLUTION NO. 98-014
THAT THE, HOUSING RECOMMEND APPROVAL TO THE CITY
COUNCIL TO $920,000 IN FINANCIAL ASSISTANCE FOR THE
CONSTRUCTION OF NINETY TWO AFFORDABLE
APARTMENT UNITS TO HELP SATISFY THE REQUIREMENTS
OF THE INCLUSIONARY HOUSING ORDINANCE FOR THE
POINSETTIA PROPERTIES SPECIFIC PLAN,
APPLICANT: BRIDGE HOUSING CORPORATION
CASE NO: SDP 98-09
WHEREAS, the master developer of the Poinsettia Properties Specific Plan,
HSL/BP/Magellan, L.L.C, has proposed to construct 92 apartment units affordable to lower income
households as a means to satisfy a portion of their affordable housing obligation as permitted by
Carlsbad Municipal Code Section 2 1.85 of the City’s Inclusionary Housing Ordinance; and
WHEREAS, the master developer’s proposal to construct said units has been submitted to the
City of Carlsbad’s Housing Commission for review and consideration; and
WHEREAS, said Housing Commission did, on the 27th day of August, 1998, hold a public
meeting to consider said proposal to construct 92 affordable housing apartment units; and
WHEREAS, at the conclusion of said special public meeting, the Housing Commission
recommended approval of the proposal to the Planning Commission and City Council; and
WHEREAS, said Housing Commission did, on the 29th day of September, 1998, hold a public
meeting to consider the request for City financial assistance for the construction of said 92 affordable
housing apartment units by of the affordable housing developer, Bridge Housing Corporation; and
WHEREAS, upon hearing and considering all testimony, if any, of all persons desiring to be
heard, said Commission considered all factors relating to the proposal to construct said affordable
housing units.
NOW, THEREFORE, BE IT HEREBY RESOLVED by the Housing Commission of the City
of Carlsbad, California, as follows:
1. The above recitations are true and correct.
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The request for City financial assistance is consistent with the goals and objectives of
the City of Carlsbad’s Housing Element, Consolidated Plan, the Inclusionary Housing
Ordinance, and the Carlsbad General Plan.
The request for City financial assistance will assist the affordable housing developer to
construct a total of 92, one, two and three bedroom affordable apartment units. The
project, therefore, has the ability to effectively serve the City’s housing needs and
priorities as expressed in the Housing Element and the Consolidated Plan.
That based on the information provided within the Housing Commission Staff Report
and testimony presented during the public meeting of the Housing Commission on
September 29, 1998, the Housing Commission hereby ADOPTS Resolution No. 98-
014, recommending APPROVAL to the City Council to provide up %920,0000 in
financia.l assistance from the City of Carlsbad’s Housing Trust Fund to Bridge Housing
Corporation for the construction of ninety two (92) affordable apartment units to help
satisfy the requirements of the Inclusionary Housing Ordinance for the Poinsettia
Properties Specific Plan.
That tbe Housing Commission recommends that the City Council grant tbe
applicant’s request to waive tbe Public Facility Fee requirement for this project
as permitted by City Council Policy Nq. 17.
That the Housing Commission recommends that the City Manager or his designee be
authorized by the City Council to execute all documents related to provision of the City
assistance, including but not limited to a Loan Agreement, Note, Deed of Trust and
Regulatory Agreement, in substantiaIly the form presented to the Housing Commission
on September 29, 1998, and subject to review and approval by the City Attorney.
PASSED, APPROVED, AND ADOPTED at a meeting of the Housing Commission of the City
of Carlsbad, California, held on the 29” of September, 1998, by the following vote, to wit:
AYES: Chairperson Wellman, Commissioners: Noble, Rose, Walker,
Escobedo and Scarpelli.
NOES: Commissioner Latas.
ABSENT: Commissioner Calverley.
ABSTAIN: None.
CARLSBAD HOUSING COMMISSION
sad J-) 1-d. blZfti0RAI-l K. FOUNTAIN
HOUSING AND REDEVELOPMENT DIRECTOR
HC RESO NO. 98-014
PAGE 2